Sanctions are commercial and financial penalties applied by states or institutions against states, groups, or individuals. They are a form of coercion that attempts to get an actor to change its behavior through disruption. Sanctions can target an entire country or they can be more narrowly targeted at individuals or groups; this latter form of sanctions is sometimes called "smart sanctions". Sanctions are used as a tool of foreign policy by many governments and are usually imposed by a larger country upon a smaller country for one of two reasons: either the latter is a perceived threat to the security of the former nation or that country treats its citizens unfairly. Sanctions can be used as a coercive measure for achieving particular policy goals related to trade or for humanitarian violations.

Sanctions take a variety of forms, including travel bans, asset freezes, arms embargoes, capital restraints, foreign aid reductions, and trade restrictions. Since 9/11, there has been a pronounced shift toward targeted or so-called smart sanctions, which aim to minimize the suffering of innocent civilians. Sanctions are generally viewed as a lower-cost, lower-risk course of action between diplomacy and war. Policymakers may consider sanctions as a response to foreign crises in which the national interest is less than vital or where military action is not feasible.

Sanctions can be unilateral, imposed by a single country, or multilateral, involving a collective decision by multiple nations or international organizations. The specific impact of sanctions on a sanctioned country can vary depending on factors such as the severity of the sanctions, the targeted sectors or individuals, the countrys level of economic resilience, and its ability to seek alternative partners or resources.

Organizations must navigate a complex network of sanctions, and failing to comply with sanctions laws can open up a business to significant legal, financial, and reputational ramifications. Sanctions fall into a number of categories, including economic sanctions, which are commercial and financial penalties that typically ban customary trade and financial relations.

In summary, sanctions are penalties applied by states or institutions against states, groups, or individuals to change their behavior through disruption. They can take various forms and are used as a tool of foreign policy by many governments. Sanctions can be unilateral or multilateral, and organizations must comply with sanctions laws to avoid legal, financial, and reputational risks.