When OFAC (the U.S. Office of Foreign Assets Control) lists a company like
NIS a.d. (Naftna Industrija Srbije) under sanctions related to
Executive Order (E.O.) 14024 and the
Ukraine-/Russia-Related Sanctions Regulations (31 CFR Part 589), it means the company is considered to be engaged in activities connected to the Russian government or its energy sector.
The mention of
“secondary sanctions risk” is especially important because it extends the reach of U.S. sanctions
beyond U.S. borders.
Here’s what it means in practice:
- Primary sanctions prohibit U.S. persons (companies, citizens, residents, or anyone operating in the U.S.) from doing business with NIS. They cannot provide goods, services, or financial transactions directly or indirectly involving NIS.
- Secondary sanctions, however, allow the U.S. government to target non-U.S. persons—for example, Serbian, European, or Asian companies—if they engage in “significant transactions” with sanctioned entities such as NIS.
This authority comes from:
- Section 11 of Executive Order 14024, which authorizes the U.S. to impose restrictions on foreign financial institutions or companies that provide material assistance, goods, services, or financial support to persons sanctioned under that order.
- 31 CFR §§ 589.201 and 589.209, which detail the prohibitions under the Ukraine-/Russia-related sanctions regulations, including the blocking of property and interests in property of designated persons, and prohibitions on providing or receiving funds, goods, or services.
In simpler terms, the
secondary sanctions risk means that even if a company is
not American, it could still face U.S. penalties—such as being
cut off from access to the U.S. financial system, having
its assets frozen, or being
added to the sanctions list itself—if it continues to do major business with NIS.
For Serbia and the Western Balkans, this creates a serious
compliance and economic risk, because NIS is a major energy supplier and employer in Serbia. Any company, bank, or trader dealing with NIS now has to consider whether those transactions could be seen by OFAC as “significant” and therefore expose them to secondary sanctions.