Sanctions Clauses Do Different Work

Sanctions clauses in trade-finance instruments do different work. Mandatory sanctions law can restrict a bank's performance whether or not any clause is present. Against that backdrop, a clause can do one of three things: restate the applicable law; clarify how the bank will handle a restricted transaction operationally; or reserve a discretion wider than the law requires. It is the third that can weaken the certainty of an independent undertaking — the concern the ICC's consolidated sanctions-clause guidance addresses. Read the issue as one of trade-finance instrument design and banking practice, not as an assessment of sanctions policy.