Rules-based controls are ineffective when the targeted parties do not follow rules

What's this about?

People disagree about whether rules work when the people they target refuse to follow them.

A rule may fail to change its target, yet still affect other people.

What supporters say

• When the target ignores a rule, the rule loses its main way to change behavior.
• Evasion and weak checks can let the target avoid the rule and reach its goal.

What critics say

• A rule can still limit the target, even when it does not fully stop the target.
• Banks, firms, allies, and trade partners may follow the rule to avoid legal or money risks.

How to read this

The number of points on each side does not show who is right; check how strong each piece of proof is.

The bottom line

The claim is too broad. A rule may work poorly against a target that refuses to obey.

Still, the rule can limit the target or change what other people do.

Rules-based controls are often judged by whether their intended target obeys them. But refusal to comply does not always mean the control has had no effect: it may still deter others, limit the target’s options or signal consequences.

The case for

When the target ignores the rule, the control can lose its main route to changing behavior. Deterrence works only when the target expects that violations will be detected and punished. If enforcement is weak, sanctions are minor or the target discounts future costs, refusing to comply can sharply weaken the rule’s direct effect. Noncompliance therefore provides some evidence of failure at the target level 1.

Evasion and poor implementation can make that problem worse. Research on sanctions finds that outcomes depend on enforcement capacity, international cooperation, the relationship between the sender and target, the policy’s objective and the target’s vulnerability. A determined target may exploit gaps in institutions or markets rather than simply accept the rule. Studies of how long controls remain effective likewise suggest that results depend on conditions around the rule, not merely on its existence (see Figure 2). Evasion and weak enforcement are some evidence that a control may fail to achieve its stated objective 2.

This does not mean every formal rule is useless. It means that where the goal is direct deterrence—and where violating the rule carries little cost—target noncompliance is a serious sign that the control is not working as intended.

The case against

A control can affect people other than its intended target. Firms, banks, allies and business partners may follow a rule to avoid legal, financial or reputational risks. Their compliance can restrict a noncompliant target even if that target rejects the rule. Sanctions can also signal disapproval, reduce resources or influence third parties. These spillover effects offer some evidence against treating target refusal as total failure 3.

Nor is partial success the same as complete success—or complete failure. A control may not secure the controller’s largest political goal but still limit certain activities or raise the costs of defiance. Compliance research points to factors beyond punishment, including legitimacy, social norms, organizational habits, perceived fairness, incentives, administrative burdens, leadership and peer behavior. Inspections, penalties and incentives can work together, meaning that better implementation may improve results even after earlier efforts produced weak compliance.

Evidence from sanctions and privacy regulation shows continuing gaps between formal requirements and actual practice, as well as evasion and sometimes harmful or counterproductive effects (see Figure 3). But those findings do not prove that controls had no effect at all. A partial effect should not be counted as total failure 4. In some cases, measuring only whether the target obeyed may exaggerate failure; in others, it may miss harm caused to third parties. The research spans sanctions, groundwater governance, organizational behavior and privacy regulation, so its lessons may not apply equally across every policy area.

The bottom line

The evidence favors a conditional rejection of the claim’s absolute wording, with high confidence. Noncompliance can defeat a rules-based control’s direct objective when the target is the main intended audience and enforcement does not make defiance costly. But it does not make every such control ineffective.

The unresolved issue is how effectiveness is defined: by target obedience, achievement of the controller’s maximum political aim, broader limits on the target or effects on third parties. Those standards can produce different judgments about the same policy. Overall, both sides have some evidence, but the evidence against the claim is stronger in the key sense that target noncompliance does not, by itself, prove that a rules-based control has had no meaningful effect.