Sanctions Exposure in US-MENA Transactions: What Counsel Must Know Before Closing

The Office of Foreign Assets Control (OFAC) maintains one of the most expansive sanctions regimes in the world, and its reach into MENA-region transactions is frequently underestimated by parties on both sides of a deal. The common assumption — that sanctions exposure is limited to designated individuals and entities — misses the broader architecture of secondary sanctions, sectoral restrictions, and the increasingly aggressive enforcement posture that OFAC has adopted since 2022.

For transactions involving MENA-region counterparties, the threshold question is not simply whether the counterparty appears on a designated list. Counsel must assess the full ownership and control structure of the entity, the nature of the underlying transaction, the jurisdictions through which funds will flow, and the potential for indirect exposure through correspondent banking relationships. Each of these vectors has produced enforcement actions in recent years.

The practical implication for deal counsel is that sanctions due diligence must be integrated into the transaction timeline from the earliest stages — not treated as a closing checklist item. Retroactive remediation of sanctions exposure is costly, time-consuming, and in some cases impossible. The time to identify and address exposure is before the term sheet is signed, not after.

Clients operating in this environment should ensure that their legal counsel has direct familiarity with OFAC enforcement practice and the specific sanctions programs applicable to their counterparties' jurisdictions. General corporate counsel, however capable, is rarely equipped to provide the depth of analysis that high-value MENA transactions require.