Secondary Sanctions
Sanctions that threaten penalties against third-country institutions — a bank with no ownership or operations in the sanctioning country — for continuing to transact with a sanctioned target. Effective through extraterritoriality operating via correspondent banking: because so much legitimate global dollar-denominated finance eventually passes through an institution connected to the U.S. financial system, a third-country bank faces a stark choice between continuing a sanctioned relationship or losing its own correspondent access to dollar clearing, and most choose compliance even without being directly subject to U.S. law otherwise.