Secondary sanctions are penalties imposed by a country, typically the United States, on individuals, entities, or countries that do business with those already subject to primary sanctions. Unlike primary sanctions, which target direct violations by the sanctioned entity, secondary sanctions penalize third parties for indirectly supporting or engaging in business with sanctioned entities, even if those third parties are not under the jurisdiction of the sanctioning country. 

In financial crime compliance, secondary sanctions present significant challenges. Financial institutions must carefully monitor their clients and business partners to avoid exposure to these penalties. For example, a bank may face secondary sanctions for facilitating transactions with a company dealing in sanctioned goods or services, even if the bank itself is not violating any direct sanctions. This broad reach underscores the need for robust compliance programs to mitigate risks and ensure adherence to complex, multi-layered sanction regimes.