Five Ways to Improve Sanctions Coordination Between the U.S. Government and Humanitarian Aid Groups

During its first year, the Biden administration has demonstrated to allies and adversaries that economic sanctions will remain an important aspect of U.S. foreign policy and economic statecraft. In 2021, the Treasury Department imposed more than 760 new sanctions designations, with roughly 49 percent of these pursuant to thematic sanctions programs targeting human rights abuses and corruption, global terrorism, cybercrime, drug trafficking and other illicit activity. However, the impact of sanctions, no matter how well intended or targeted, can often exacerbate ongoing humanitarian crises by restricting the logistical and financial activity of aid organizations operating inside sanctioned jurisdictions. The Center for a New American Security (CNAS) recently concluded a year-long private roundtable series that brought together U.S. government officials, humanitarian aid organizations, financial institutions, regional experts, and representatives of the private sector to discuss possible solutions to reduce the negative impact of sanctions on humanitarian aid efforts in heavily sanctioned jurisdictions such as Iran, Venezuela, Cuba, North Korea and Syria.

While the Biden administration has pursued multilateral coordination with allies on sanctions to mitigate their potential impacts on humanitarian issues, current sanctions programs still pose significant obstacles to the facilitation of life-saving humanitarian aid in heavily sanctioned countries. Despite numerous efforts under multiple presidents to address these obstacles, humanitarian aid organizations still cite frustrations about a lack of clarity in sanctions guidelines and policies, long logistical backlogs to process inquires and overcompliance from banks—meaning financial institutions refusing to facilitate financial transactions going into, or related to, certain countries for fear of violating U.S. sanctions. In response, the Treasury Department’s 2021 Sanctions Review outlined several steps to modernize sanctions to achieve clear policy objectives and committed to cooperating with allies and partners and to mitigating unintended economic, political and humanitarian consequences. This review, which came out in October 2021, is forward looking, and the administration has not yet taken significant steps to update existing legacy sanctions against heavily sanctioned jurisdictions. As the administration contemplates potential actions to do so, the following policy recommendations may support the U.S. government’s commitment to mitigating the negative effects of sanctions on humanitarian crises within sanctioned jurisdictions.

1. Congress should allocate funds to establish a special office within the Office of Foreign Assets Control (OFAC) specifically tasked with coordinating sanctions-related inquiries between the Treasury Department and humanitarian aid organizations operating in heavily sanctioned jurisdictions.

The representatives of humanitarian aid organizations that participated in our study mentioned several instances in which the delay in response from OFAC on new sanctions guidelines significantly affected life-saving operations in heavily sanctioned countries, including the distribution of medicine, food and water sanitation equipment. The Treasury Department has several toll-free telephone lines, with one specifically for licensing inquiries, as well as postal mailing addresses and email addresses to field compliance questions regarding its sanctions policies. However, humanitarian stakeholders expressed frustration about untimely responses to their inquiries, suggesting that the Treasury Department should adapt its policies to ensure that inquires from humanitarian aid organizations are not processed through the same U.S. government channel as other inquiries, such as those related to designated persons or entities seeking to be removed from U.S. sanctions programs. With additional funding from Congress, the Treasury Department could create a special office within OFAC to draw expertise from its licensing, policy, and compliance units to coordinate with humanitarian agencies to address these issues more quickly and clearly.

Several humanitarian aid organizations also noted that, while larger international aid groups often have more access to U.S. government officials due to existing relationships, smaller aid groups responsible for the delivery or facilitation of relief goods often do not, which impedes their ability to receive timely answers to their compliance inquiries. This new office should work closely with the U.S. Department of State and the U.S. Agency for International Development (USAID) to assess and effectively respond to any issues raised, given these agencies’ expertise on humanitarian issues. In addition to creating effective channels for real-time response to developing humanitarian challenges, through this new special office, OFAC should designate time at regular intervals to engage with large and small humanitarian aid groups. These meetings could benefit from written submissions by aid groups to organize their inquiries ahead of meetings.

2. The State Department should add a humanitarian aid-specific portfolio to the newly appointed sanctions coordinator position.

While parts of the State Department and USAID possess relevant expertise, creating a specific humanitarian aid-related portfolio within the sanctions coordinator position at the State Department will allow for greater coordination across programs and for more attention to be dedicated to dealing with overcompliance and aid delivery challenges. President Biden recently nominated James O’Brien as the State Department sanctions coordinator, a position that remained unfilled throughout the previous administration despite the rapid intensification of U.S. sanctions during that period. Since U.S. sanctions affect the operations of U.S.-based and foreign humanitarian aid organizations, designating a specific State Department official to coordinate with all humanitarian aid organizations can provide the U.S. government with greater insight into the challenges sanctions pose to humanitarian aid efforts abroad. Additionally, the sanctions coordinator could work closely with the liaison and/or special office at OFAC coordinating with humanitarian aid groups and USAID to maximize joint efforts.

3. The Treasury Department should provide explicit authorization for humanitarian aid organizations operating in heavily sanctioned countries that allows financial institutions to easily identify and facilitate humanitarian aid-related transactions entering these countries.

According to the representatives of humanitarian aid organizations that participated in this study, issuing broad general licenses for humanitarian-related activities in heavily sanctioned countries has not reduced growing levels of overcompliance that can impede potentially life-saving humanitarian work. In addition to routine renewal of appropriate general licenses, the Treasury Department should encourage humanitarian aid organizations to submit details of their activities in exchange for a long-term license or other guarantee that such activity is not covered by sanctions. This would in effect create a “white list” of approved humanitarian aid organizations and their operations abroad that financial institutions could reference when communicating with on-the-ground workers and facilitating financial transactions entering sanctioned countries.

Although OFAC already allows entities to submit details of their activities in certain situations to receive an “advisory opinion” on whether such activity as outlined is subject to existing sanctions, this process is often resource intensive and time consuming. As such, this is not conducive to a fast-moving humanitarian situation. For monitoring and whitelisting to work efficiently enough to respond to humanitarian crises, the U.S. government would likely need additional and dedicated resources, such as the previously suggested new OFAC office. The U.S. government would also need to create an easy-to-use, streamlined process that would allow humanitarian aid groups to apply in a timely manner and/or be added to multiple general licenses in the case of global humanitarian groups.

4. OFAC should publish a fact sheet for each country-specific sanctions program and country-related humanitarian crisis to reduce confusion about permissible financial activity and transactions.

Instead of requiring financial institutions to sift through multiple online sources to find relevant information on permissible transactions and financial activity, the U.S. government should consolidate all country-specific general licenses, waivers, FAQs, and other relevant sanctions exemption information into a single fact sheet for each target country and humanitarian crisis. To date, OFAC has published a fact sheet on the provision of coronavirus-related humanitarian assistance and trade with language specific to sanctions programs related to Iran, Venezuela, North Korea, Syria, Cuba and Ukraine/Russia. Under President Biden, the Treasury Department also published a fact sheet specific to the humanitarian crisis in Afghanistan as part of its commitment to enable humanitarian aid to countries in need. This effort should be extended to all country-specific sanctions programs and involve updates annually or when new information related to the country emerges.

Representatives from aid groups and financial institutions repeatedly expressed concern that worries about unwittingly violating U.S. sanctions impedes communication and financial resources needed to transport and deliver supplies to vulnerable populations. According to the aid workers participating in this series, the exemption language included in current general licenses, advisories and FAQs is often too opaque, vague and complicated to help address concerns about compliance from financial institutions needed to process funds entering a sanctioned country. While likely a major logistical effort for the U.S. government without additional resources, providing a comprehensive fact sheet outlining all relevant licenses and permissible financial activity within sanctioned countries may help reduce overcompliance issues from banks that often delay or prevent financial transactions that fund humanitarian aid operations and the delivery of relief goods. The Biden administration should continue publishing clear and easy-to-understand FAQs with every new or amended general license to provide greater clarity on permissible transactions and activities related to sanctioned jurisdictions.

5. OFAC should allow familial remittances to all sanctioned countries, with appropriate carve-outs to avoid sending money directly to sanctioned individuals or groups.

Many humanitarian aid groups that participated in this research series described how civilian populations suffering from humanitarian crises often rely on remittances from family and friends living outside of the country for daily expenses. Banks and other financial institutions operating in sanctioned countries often lose their ability, or will, to facilitate remittances due to fear of violating U.S. sanctions. While the Treasury Department has voiced its commitment to better calibrate sanctions to target specific individuals and entities with concrete policy objectives in mind, numerous broad-ranged sanctions exist that prevent necessary remittances from entering heavily sanctioned jurisdictions. In each country-specific fact sheet, the Treasury Department should outline all permissible financial transactions and activity, including small-amount remittance transactions from and to nonsanctioned individuals.

Conclusion

Although there is a clear need for more action from the U.S. government to address the unintended consequences of sanctions, the Biden administration has made public steps to mitigate their spillover effects on civilian populations. In 2021, the Treasury Department issued roughly 30 general licenses, along with more than 53 new FAQs on various sanctions programs, to better clarify proper compliance protocols and provide guidance on exemptions related to humanitarian aid and coronavirus relief with specific emphasis on Afghanistan, Belarus, Burma, Ethiopia, Iran, Syria and Venezuela. Implementing these policy recommendations would strengthen the U.S. government’s ongoing efforts to mitigate the negative impacts of sanctions on civilian populations, which should remain a central focus of U.S. sanctions strategy.

The author would like to thank Emily Kilcrease, Alex Zerden, Rachel Ziemba and all participants of this research study for their feedback and support.