Write three pages for each question. Both questions focus on complicated, multi-faceted issues. The questions require you to distill these complicated issues down to their fundamental elements,...

1. What is the purpose of U.S. laws prohibiting economic transactions with certain foreign countries and other entities enacted? What harms do their violations cause? How have large financial institutions attempted to circumvent those laws? To what extent do you agree with the argument put forth in the legal case, Freeman vs. HSBC, that financial institutions that violate these laws are partially responsible for the deaths of American military personnel killed by state-sponsored te
orists?
U.S had a long history to restrict the economic transactions with enemies. Office of Foreign Assets Control (OFAC) prohibits by law the financial transactions and trade of U.S individual or entity with te
orists or persons who are engaged with proliferation of weapons or international narcotics trafficking. Economic sanction is a tool of choice for the U.S policymakers to address the major geopolitical challenges. U.S has imposed this economic sanction to restrict any dealings with the actors that threatens their interest and violate international norms of behaviour. The ultimate purpose of U.S laws prohibiting economic transactions with certain entities or countries is to protect national security. OFAC has maintained a separate list of banned countries, entities and individuals and if the financial institutions are found to do business with theses banned countries and entities they are imposed huge penalties. (Leigh, 2014)
Despite the prohibition, OFAC violations occur- a growing number of financial institutions are evading the rules in order to reap a sizable profit. Four of the ten largest banks in the world are found to do the business with such banned countries or entities during 2005-2014. An increasing number of sanctioned banks are penalized several times for committing various forms of financial crimes in the recent years. The impact of globalization has played an important role here. The international banks have now become truly global in nature – they express little loyalty on the laws and policies of a single country. Repeated violations reflect the fact that financial institutions are fully committed to maximize their profit. Most importantly, such violations occur at the cost of social and political interest – the costs that are usually borne by others. Some of the world’s largest and reputed financial institutions have committed financial crime solely driven by their financial interest. (Leigh, 2014)
OFAC rules have systematically violated over the years by one of the leading bank HSBC. According to the investigation conducted by the Senate Permanent Subcommittee, it is evident that despite the long-standing prohibitions, HSBC is very much engaged in Iranian transactions. HSBC executives were reluctant to stop the practice for years. HSBC Europe and HSBC middle East have committed Iranian violations. Despite the ban on Iranian transactions, the senior management of HSBC were looking forward for a strong presence in Iran and gave the directives to the employees accordingly. While following the directives from the superiors, the employees of HSBC Europe and HSBC Middle East use to process transactions for Iranian clients and consciously delete the reference while submitting the documents. (Leigh, 2014)
In a lawsuit filed in 2014, five...