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# reference state cordapp [<imgsrc="../../webIDE.png"height=25 />](https://ide.corda.net/?folder=/home/coder/samples-java/Features/referencestates-sanctionsbody)
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# Sanctionbody -- ReferenceState
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This CorDapp demonstrates the use of [reference states](https://training.corda.net/corda-details/reference-states/) in a transaction and in the verification method of a contract.
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## Concepts
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This CorDapp allows two nodes to enter into an IOU agreement, but enforces that both parties belong to a list of sanctioned entities. This list of sanctioned entities is taken from a referenced SanctionedEntities state.
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### Flows
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Next, we want to issue an IOU, this happens in [IOUIssueFlow](./workflows/src/main/java/com.example.flow/IOUIssueFlow.java#L150-L173)
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We've seen how to successfully send an IOU to a non-sanctioned party, so what if we want to send one to a sanctioned party? First we need to update the sanction list which you'll find in [UpdateSanctionsListFlow](./workflows/src/main/java/com.example.flow/UpdateSanctionsListFlow.java#L45-L90).
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We need to update the reference before we use it in a new transaction, we receive our sanctionslist with the [GetSanctionsListFlow](./workflows/src/main/java/com.example.flow/GetSanctionsListFlow.java#L51-L63)
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