For companies operating on the international market, protection against sanctions risks plays a key role in checking counterparties. Insufficient attention to the sanctions screening can have negative consequences: from legal and financial to reputational ones.
Despite the changing global conditions, economic and information battles, Russian companies are actively developing international cooperation, exploring new markets and building alternative routes and supply chains.
Are sanctions important?
Some companies may avoid direct interaction with organizations or individuals against whom sanctions have been imposed. However, this does not mean that the issue of sanctions is not relevant for them.
For example, imagine that the company "N" exports goods to a country that is not under sanctions. However, these goods are then re-exported to the country that is under sanctions. In such a situation, the company "N" becomes a part of the supply chain that violates the sanctions. It is also possible that one of the parties to the supply chain may actually or indirectly be under the control of an individual or organization subject to sanctions.
Ignoring in-depth sanctions checks may lead to unintentional "involvement" of the company in situations related to violations of sanctions regimes. When doing business at the international level, compliance procedures must be carried out not only with respect to direct counterparties, but also with respect to all levels of ownership of partners and related persons.
Independent manual verification of the counterparty for sanctions risks is an extremely difficult task. This is due to the variety and complexity of sanctions. One of the main problems is the lack of a single consolidated source that would combine all the sanctions imposed by various countries, organizations and departments. Some initiators of sanctions may not keep a general list of their restrictive measures, but post information about sanctions in legislative acts. In addition, information about sanctions is often presented in national languages, is unstructured and requires detailed analysis, ranging from identifying the person who has fallen under sanctions to understanding the characteristics of restrictions, such as the period of sanctions, the type of restrictions and the program.
will help you simplify the process of sanctions screening, avoid errors that may occur during manual verification, and save significant resources.
The module makes it possible to check Russian and international companies, persons, water and air transport according to the consolidated sanctions list, including the 50% Rule. Persons associated with companies are also checked: beneficiaries, owners, managers, affiliates and subsidiaries.
Sanctions in action
Sanctions, as a means of foreign policy, are applied in various situations, and their effectiveness and impact can be extremely diverse. Regardless of which side of the world arena you are on, ignoring the sanctions restrictions can lead to serious consequences.
Let's look at examples of "sanctions in action".
1) Penalty of Standard Chartered Bank for lending to a bank owned by Sberbank PJSC
Standard Chartered Bank issued 102 loans to DenizBank in the period from April 2015 to January 2018.
This transaction came under the microscope of the UK authorities, and the British bank was subjected to two fines totaling GBP 20.47 million. The reason for this penalty was that Standard Chartered Bank provided financing to Turkish DenizBank, which at the time of the transaction was a subsidiary of Sberbank PJSC. PJSC Sberbank, in turn, is included in the sanctions lists of the European Union.
Standard Chartered Bank admitted that it had violated the sanctions regime, so in the end the amount of the fine was reduced by 30%.
2) A fine for violating Iranian sanctions
OFAC issued a fine of USD 9.6 million to 3M Company for violating Iranian sanctions.
The violations occurred from 2016 to 2018, when the Swiss company 3M East, a subsidiary of 3M Company, carried out an export operation through the German organization Bonyad Taavon Naja, an organization controlled by Iranian law enforcement agencies.
3) Assistance in circumventing sanctions through transactions in the currency of the initiator of sanctions
Turkish citizens Mehmet Tokdemir and Alaaddin Aykut have fallen under secondary US sanctions for assisting Iranian enterprises in conducting financial transactions in US dollars and euros, for the purchase of weapons from a number of foreign suppliers.
4) Sanctions against transport
Bangladesh has refused permission for a Russian vessel to enter its ports due to US sanctions. The American authorities actively monitor the traffic of sub-sanctioned water and air transport, requiring local authorities to comply with extraterritorial restrictions.
Such sanctions tools led to a ban on entry into the territorial waters of Bangladesh for the Ursa Major vessel, which was transporting equipment of Rosatom Corporation for the construction of the Ruppur nuclear power plant. Since Ursa Major, the water transport, is on the SDN list, it was forbidden to enter the Bangladeshi port.
Later, the Bangladeshi authorities told local media that the Russian side mistakenly sent the cargo by this vessel and promised to replace it with another one in order to deliver the cargo to the Bangladeshi port.
These cases clearly demonstrate how important it is to thoroughly check your clients and counterparties for sanctions risks.
Sanctions. Globas Solution
Sanctions Compliance in Globas contains detailed information about sanctions and restrictions, including the 50% Rule, as well as additional sources and a deeper analysis of companies, persons and objects under restrictions.
Sanctions Compliance facilitates the process of sanctions screening, providing many opportunities.
A module for in-depth sanctions screening of counterparties. The check is conducted by over than 40 new criteria. Sanctions Compliance provides an opportunity to check Russian and foreign companies, persons, water and air transport. Persons associated with companies are also checked: beneficiaries, owners, managers, affiliates and subsidiaries. The module contains extensive information about the imposed sanctions and restrictions, including the 50% Rule, additional sources and deeper analytics on companies, persons and objects that have fallen under restrictions and in various risk registries.