A dollar transfer cleared in New York, a US component worth eleven per cent of a machine’s value, an employee holding a green card within the decision-making chain: any one of these, on its own, is enough to bring a French company within the scope of a US statute with extraterritorial reach. The term is in fact a misnomer. The question is never extraterritoriality as such, but how solid the claimed connecting factor is and whether there is a court before which that connection can be argued. It is precisely on this second point that the US system stands apart: the heaviest penalties usually stem not from a judgment but from an administrative decision or a settlement, reached under the threat of exclusion from the US market and financial system. The message is plain: cooperate or disappear from the market. Six points make it possible to map this risk and to identify the room for manoeuvre that is genuinely available.
The dollar, a basis for jurisdiction in itself
Almost all dollar payments pass through a correspondent account held in New York. OFAC draws a formidable consequence from this: once a US financial institution has processed the payment, there is a territorial connection, and the foreign company that concealed the true nature of the transaction has “caused” the violation committed by the US institution. This “causing a violation” theory underpins the major French banking cases: BNP Paribas, about $8.97 billion on 30 June 2014; Crédit Agricole CIB, about $787 million in October 2015; Société Générale, about $1.34 billion on 19 November 2018. The figures speak for themselves. Nor is the theory confined to large institutions: the settlement OFAC reached on 18 May 2026 with an Indian industrial group, for $275 million, penalised thirty-two violations of the Iran programme whose only US point of contact was the processing of more than $192 million in payments. For a mid-sized exporter, the choice of contract currency is therefore, in practice, a choice of jurisdiction.
Technology content and ownership
Two mechanisms reach goods made outside the United States. The de minimis rule subjects to US regulation any foreign item incorporating controlled US content above a threshold, generally twenty-five per cent, or ten per cent for embargoed countries. The foreign direct product rule goes further still: it captures an item made abroad whenever it is the direct product of US technology or software, whatever its US content. The ITAR regime for defence articles has no threshold at all: a US component worth a few tens of euros can permanently bring a million-euro European system that incorporates it under US control. Then comes the fifty per cent rule. Since OFAC’s guidance of 13 August 2014, any entity owned fifty per cent or more, directly or in the aggregate, by a blocked person is itself blocked by operation of law, without appearing on any public list. The Bureau of Industry and Security carried this logic over to export controls by a rule of 30 September 2025, suspended only until 9 November 2026. A suspension is not a repeal.
Secondary sanctions, or exclusion without a judgment
Secondary sanctions do not claim to govern a foreign company’s conduct outside US territory: they make access to the US market and financial system conditional. A European company remains formally free to trade with certain Russian sectors; if it does, it risks the closure of its dollar correspondent account and the loss of US financing. The executive order of 22 December 2023 on Russia thus allows the US Treasury to close, within ten days, the correspondent account of any foreign financial institution that has facilitated a significant transaction involving Russia’s military-industrial base, a notion so broad that it covers the supply of CNC machine tools or mere ball bearings. OFAC has confirmed that a foreign bank can be targeted even without knowledge of the underlying transaction. Ignorance is no protection. This is why so many European banks refuse to handle any flow with even a tenuous link to Russia, Central Asia or the Caucasus: the sanction does not hit the company, it hits its bank.
For a French company already targeted by Washington, see our article on a French company sanctioned by OFAC; on the 1968 blocking statute and requests for documents from the United States, our analysis of US discovery.
The Foreign Corrupt Practices Act, a risk that shifts without disappearing
FCPA enforcement has contracted dramatically since Executive Order 14209 of 10 February 2025, which suspended the opening of any new investigation for one hundred and eighty days, followed by the guidelines of 9 June 2025, which refocused prosecutions around four criteria, among them protecting the competitiveness of US companies. The Securities and Exchange Commission has not brought a single FCPA action since December 2024. But the five-year limitation period, which can be extended to eight, keeps running on past conduct, and recent French practice endorses an alternative model. A declination letter issued on 17 March 2026 to a French medical device manufacturer was coordinated with a judicial public interest agreement (CJIP) approved two days later by the French national financial prosecutor’s office, the fact that the French proceedings came first having been the condition for US leniency. Being first to act changes everything. Looking ahead to its transposition, Directive (EU) 2026/1021 of 29 April 2026, which sets minimum fines of five per cent of worldwide turnover for the most serious offences, will in any event shift the centre of gravity of anti-corruption risk towards Europe.
Real limits in case law, but argued on the facts
With Morrison v. National Australia Bank (2010) and then RJR Nabisco, Inc. v. European Community (2016), the Supreme Court revived the presumption against extraterritoriality: absent a clear indication from Congress, only conduct whose focus lies within US territory can be reached. It applied the same method to trademark law in Abitron Austria GmbH v. Hetronic International (2023), which on remand cut an initial award of ninety million dollars to about two hundred and forty thousand. In corruption matters, United States v. Hoskins (Second Circuit, 2018, affirmed in 2022) remains the most useful defence for a French executive of a group not listed in the United States: where Congress deliberately limited the categories of persons covered by the FCPA, prosecutors cannot bring back through complicity those it excluded. The statute draws a line that prosecutors cannot move. The Supreme Court has gone further: on 20 February 2026, in Learning Resources, Inc. v. Trump, it held that IEEPA (the basis of nearly all sanctions programmes) does not authorise the President to impose tariffs, since the power to “regulate” importation does not carry the separate power to tax. These limits, however, only protect a company that has documented its facts in advance: where the harm is located, the absence of hierarchical control by a US subsidiary, the actual share of sales made in the United States.
European defences and what to do in an emergency
The 1996 EU Blocking Statute is effective only within its narrow scope (still limited today to Cuba and Iran), but the Court of Justice’s judgment in Bank Melli Iran v Telekom Deutschland (21 December 2021) gave it horizontal direct effect that can be relied on in a civil dispute between private parties, placing on the party that terminated a contract the burden of showing that it was not seeking to comply with US law. Article 9 of the Rome I Regulation allows US sanctions to be taken into account before a French court as a mere matter of fact, under force majeure or hardship, as the Paris Court of Appeal held as early as 2015. The French blocking statute of 26 July 1968, revived by the single point of contact set up in 2022, requires the SISSE (the government’s strategic information and economic security service) to be notified before any response to a foreign order; invoking it without having done so, by contrast, exposes the company to a finding of bad faith. Faced with an OFAC notification, the designation of a business partner or a bank’s refusal, the decisive reflex is always the same: never respond in haste without having decided, beforehand, which authority (French, European or US) it is in your interest to approach first.
For support with an international trade transaction or dispute, see our page on international trade law and, on this specific subject, our page on international sanctions, as well as the one on international contracts.
Further reading: US discovery and the French Blocking Statute: how to handle a document request; Foreign direct investment in France: the six points that decide whether a transaction is valid.