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Multilateral Development Banks (MDBs), such as World Bank Group (WBG), has a unique place in corporate compliance for their own sanctions regimes. While they are not a national government, which is traditionally recognized as the sanctioning authiority within its jurisdiction, MDBs exercise the power they have to impose restrictions on target entities. While essentially administrative in its nature — as opposed to civil and criminal implications that entail national sanctions — MDB-imposed sanctions are public and have become widely recognized as a risk from a corporate compliance standpoint. The following looks into WBG sanctions regime based on its guidelines and notes ,which provides insights into how MDB sanctions work.

Legal Basis for World Bank Sanctions and Its Jurisdiction

The World Bank’s jurisdiction to sanction is grounded in the “fiduciary duty” to ensure that the funds entrusted to it are used for the purposes intended. As such, the jurisdiction of the Bank’s sanctions regime essentially includes any and all actors involved in Bank-financed procurement, including bidders, suppliers, contractors, consultants, and their agents (whether declared or not), subcontractors.

Sanctionable Practices and Range of Sanctions

The MDBs including the World Bank have agreed on harmonized definitions of sanctionable practices of fraud and corruption. Conceptually, these include corrupt practice, fraudulent practice, collusive practice and coercive practice, as well as obstructive practice in connection with the Bank’s investigation.

Additionally, there are five possible types of sanctions the World Bank can impose: debarment with conditional release, debarment for a fixed term, conditional non-debarment, letter of reprimand, and restitution. Debarment means ineligibility to be awarded a Bank Group-financed contract or otherwise participate in Bank Group-financed activities for a certain period of time.

For instance, in July 2025, the World Bank announced the 18-month debarment with conditional release of a Dutch software company in connection with a fraudulent practice as part of a Bank project in Liberia. Specifically, the Dutch company failed to disclose commissions paid or to be paid to an agent in connection with a contract under the project, due to inadequacy of its internal controls and supervision, making the company ineligible to participate in projects and operations financed by institutions of the WBG.

Other avenues of sanctioning an entity

What makes the World Bank or, in general, MDB sanctions extraordinary to the eyes of compliance professionals are the unique avenues of identifying entities that are added to the sanctions list. Broadly speaking, there are two other ways an entity can be sanctioned even if it did not perform a sanctionable practice on a Bank-financed project.

First, affiliates controlled by sanctioned parties are normally subject to sanction and affiliates that control the sanctioned entity may also be sanctioned on the merits of each case. The World Bank keeps the public list of ineligible firms and individuals which amount to a total of around 1,300. Among them, around 180 are listed on the grounds of being a controlling or controlled affiliate of a sanctioned entity.

Finally, the WBG may recognize and enforce the debarment decision of other multilateral development banks in accodance with the Agreement for Mutual Enforcement of Debarment Decisions. Cross debarment grounds, with sanctions originating from other banks including Asian Development Bank and African Development Bank, account for almost 550 sanctioned entities on the list.

Since Russia launced a full-scale invasion of Ukraine in February 2022, nearly half a thousand foreign companies have fully exited Russia, including McDonald’s and Unilever, while more than a thousand foreign companies have scaled back operations in the Russian market. It became untenable to operate in the aggressor country as sanctions, humanitarian, and reputational risks build up under the pressure from Western governments and consumers. For a business that has already determined to exit Russia, however, the road to the exit is still fraught with complex rules intended to make the whole process difficult, including steep discounts of the assets’ market value more than 50%, a contribution to the Russian federal budget (also known as the “exit tax”) that has increased from starting 10%, and a consent from the Russian president for sizeable transactions. While businesses may still try their best to structure the transaction in their favor, they must also get blessings and exemptions from the sanctioning governments prohibiting transactions with the Russian government and sanctioned entities. Understanding that every different transaction may require specific exemptions, below are stated exemptions the US, EU, and UK put out:

Through the Trump administration’s ongoing repriotization of regulatory enforcement areas, one notable change is its increasing use of Foreign Terrorist Organizations (FTO) and Specially Designated Global Terrorists (SDGT) designations. Most notably, on February 20, 2025, the U.S. Department of State desginated eight Latin American crime groups, including Tren de Aragua (TdA), Mara Salvatrucha (MS-13), Cartel de Sinaloa as FTOs an SDGTs. This follows Attorney General Pam Bondi’s February 5, 2025, memorandum on “Total Elimination of Cartels and Transnational Criminal Organizations,” which became a new FCPA focus over conventional white-collar crimes that do not involve such a terorrist connection. So what exactly are FTO/SDGT designations, how different and powerful sanctions tools are they?

As for FTOs, the Secretary of State desginates (1) foreign organizations that (2) engage in terrorist activity or retain the capability and intent to engage in terrorist activitiy or terrorism that (3) threaten the security of U.S. nationals or national security of the United States as FTOs in accordance with section 219 of the Immigration and Nationality Act (INA). The legislative origin of the FTO designation goes further back to the Antiterrorism and Effective Death Penalty Act of 1996, in response to the bombings of the World Trade Center and Oklahoma City. A designated FTO is inadmissible to and removable from the U.S., its assets are blocked, and it is unlawful for a person in the U.S. or subject to the U.S. jurisdiction to knowingly provide “material support or resoruces” to a designated FTO; the “material support” statute can be expansively interpreted and may have exposure to secondary sanctions with its extraterritorial scope. When a FTO is designated by the DOS, it is also added to OFAC’s SDN list.

SDGT is a largely similar counter-terrorism sanctions tool, though targeting a wider range of entities, including terrorist groups, individuals acting as part of a terrorist organization, and other entities such as financiers and front companies. SDGT is designated by the DOS or DOJ. An SDGT designation is made under the authority of the Executive Order 13224, issued by the President Bush as a response to the attacks on September 11, 2001. Additionally, any transaction by any U.S. person or within the U.S. that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions in the Order is prohibited and may be subject to civil and criminal penalties.

A case in point well demonstrating the interplay between FTO and SDGT and additional consideration of its impact on humanitarian-related activities is the terrorist designation of Ansrallah, commonly known as the Houthis, a political movement and militarnt group in Yemen. During his first term, President Trump designated Iranian-backed Ansrallah as a FTO in January 2021. President Biden, however, subsequently revoked Ansrallah’s FTO status over concerns that humanitarian aid to Yemeni people would be impeded. As Ansrallah attacks on vessels in the Red Sea and the Gulf of Aden, they were redesignated as an SDGT in January 2024. (It is noteworthy that SDGT is generally considered to be more flexible whereas FTO, of which designation and revocation criteria are legally defined, is more severe due to FTO’s “material support” statute’s long-reaching hook and requirements for financial institutions to freeze and report the designee’s assets. SDGT’s revocation is also flexible as the geopolitical situation deescalates and is more allowing for humanitarian carve-outs.) In March 2025, the Trump administartion redesiganted Ansrallah as a FTO.

Syria is at a crossroads. In December 2024, the Assad regime that had ruled the country for 50 years was toppled by a rebel coalition led by Hayat Tahrir al-Sham (HTS), an Islamist militia, and replaced by a transitional government led by its leader, Ahmed al-Sharaa. Despite its promises of change that make Western countries skeptically hopeful, including respecting the rights of all the country’s diverse religious and ethic groups, many are now pointing to existing sanctions as major roadblocks to Syria’s road to success. It does not help that HTS, which find its roots in Al-Qaeda, is designated as a terrorist orgnaization. Below are major sanctions currently imposed on Syria:

United States: U.S. designated Syria as a state sponsor of terrorism since 1979. The U.S. has sanctioned the Syrian government, including the Central Bank of Syria, senior Syrian government officials, and individuals and entities supporting the Assad regime and/or responsobile for human rights abuses in Syria. The U.S. has also prohibited the exportation of services to Syria, and there have long been legal restrictions on what goods U.S. persons can export to Syria. The Caesar Syria Civilian Protection Act of 2019 include secondary sanctions that prohibit third-country individuals and companies from providing support to the Syrian government to further its acts of serious human rights abuses. It was recently reported that the U.S. offered partial sanctions releif on the conditions of Syria’s destruction of any remaining chemical weapons stores, coopereation on counter-terrorism, and making sure foreign fighters are not installed in senior government roles.

United Nations: U.N. Resolution 1636 (2005) prevents the entry and transit of and also freezes the assets of Syrian government officials involved in the February 14, 2005, terrorist bombing in Beirut, Lebanon. Prime Minister Rafic Hariri, part of anti-Syria opposition, was assassinated in a suicide truck bomb explosion done by Hezbollah, which resulted in a popular movement that forced the withdrawal of Syrian troops in Lebanon.

European Union: The EU adopted in the timeframe of 2012-2013 against the systematic violations of human rights in Syria, the restrictive measures targeting Syrian individuals and entities supporting the Assad regime include arms import, asset freeze, financial measures, inspections, and trades in certain items. In response to the political transition in Syria, the Council of the EU decided to suspend a number of restrictive measures in key areas of energy, transport, and finance on February 24, 2025, while measures on other sectors are still in place.

United Kingdom: The “Exiting the European Union Sanctions – The Syria (Sanctions) (EU Exit) Regulations 2019” encompasses financial sanctions (including asset freeze, investment and financial services), director disqualifications, trade sanctions (oil, military and monitoring goods, crude oil and petroleum products, aviation fuel, Syrian bank notes or coinage, gold and previous metals, etc.), immigration sanctions/travel ban, transport sanctions (aircraft landing). On March 6, 2025, the UK has lifted freezes on 24 Syrian entities that were previously used by the Assad regime to fund the oppression of the Syrian people, including the Central Bank of Syria, Syrian Arab Airlines, and energy companies.