Foreign economic activity in modern conditions requires businesses to pay special attention to issues of sanctions compliance. Sanctions regimes are being updated more and more often, covering not only individual companies and persons, but also expanding the lists of goods and technologies prohibited for export and import. The changes concern both the lists themselves and the interpretation of legislative norms in different jurisdictions, which makes foreign trade operations a high-risk area.

In such a situation, it is critical not only to understand the new requirements, but also to be able to effectively use the available tools to minimize risks and ensure business stability.

Why sanctions risks have become critical

Sanctions restrictions may affect not only countries and companies, but also specific product categories. At the same time, the same product may be classified differently depending on the directory used: codes of the EAEU CN of FEA, CN of the EU, HTS of the USA, directories of dual-use goods, chemical elements, as well as internal classifiers of various departments.

Incorrect identification of the code or ignoring the current restrictions can have serious consequences – from blocking of foreign trade transactions and seizure of cargo to large fines and criminal liability.

Particular attention should be paid to the following goods:

Dual-use products are goods and technologies used in both civilian and military spheres. These can include:

Export or import of such goods without the appropriate license may violate export control laws both in Russia and abroad. In addition, cooperation with a foreign partner involved in violating the sanctions regime may become grounds for secondary sanctions.

The modern system of sanctions regulation for goods is a complex and constantly changing legal landscape. Every week, new restrictions appear, existing lists are updated, wording is expanded, and assessment criteria change — with each state or international organization creating its own sanctions regimes, guided by its own priorities and policies.

The key difficulty in dealing with commodity sanctions is their fragmentation and legal ambiguity. The same product may be subject to sanctions in several countries at once, and for different reasons.

In addition, in response to external restrictions, countries, including Russia, are introducing their own counter-sanctions, which create an additional legal burden on participants in foreign economic activity. As a result, companies have to take into account hundreds of sources, from international resolutions and directives to decrees and regulations at the national level.

The problem is aggravated by the ambiguity of interpretation: it is not always obvious whether a particular product is subject to sanctions, especially when using different commodity directories, translating technical descriptions or when there is no direct indication in the lists.

The uncertainty and multi-layered sanctions regimes can jeopardize not only individual transactions, but also the entire activity of the company. Sanctions can change without warning, and it is extremely difficult to detect this manually by screening each product

In such a situation, manual or episodic analysis becomes ineffective and risky.

The solution is to use professional tools, such as Sanctions Compliance in Globas.

Using Sanctions Compliance in Globas, you get ample opportunities for a comprehensive screening of goods for sanctions and restrictions. You will be able to:

Sanctions Compliance in Globas helps businesses confidently navigate the sanctions labyrinth and reduce the risks of foreign economic activity.

In an unstable economy, it is important to recognize in advance the signs of bankruptcy of a company in order to avoid financial losses and cooperation with unreliable counterparties. Falling liquidity, growing debt, arbitration claims − all this may signalize the looming problems.

In the Newsletter, we will explore the key signs of possible bankruptcy, the distinction between legitimate and illegitimate bankruptcy, and the consequences of illegal bankruptcy. You will know how Globas helps to identify future bankrupts by analyzing arbitration cases, financial indicators and other important factors.

Bankruptcy is a procedure for declaring a legal entity or an individual entrepreneur as financially insolvent, in other words, unable to fulfill its or her/his obligations to creditors. The process begins when a company accumulates debt that it cannot pay off.

In Russia, the minimum amount of debt for initiating bankruptcy proceedings is RUB 2,000,000 for legal entities and RUB 500,000 for individuals.

Bankruptcy proceedings can be initiated by:

After filing an application, the Court appoints a receiver who assesses the financial condition of the debtor, analyzes its assets and liabilities and takes measures to recover debts.

After the initiation of bankruptcy proceedings, a register of creditors' claims is being formed by the Court. Any organization or person that has confirmed debts to the bankrupt can claim their rights to collect the debt. For this, they submit an application to the Court within the prescribed period. Depending on the stage of the process, creditors have rights to:

Bankruptcy can be legitimate when a company is really unable to fulfill its obligations and undergoes the procedure according to the law. However, there are also schemes of illegitimate bankruptcy, when debtors deliberately withdraw assets, create fictitious liabilities or apply illegal debt cancellation schemes.

Illegitimate bankruptcy is divided into two types:

Russian law provides for serious sanctions for deliberate and fictitious bankruptcy:

1. Criminal liability (Articles 196 and 197 of the Criminal Code of the Russian Federation):
• a fine of up to RUB 500,000 or in the amount of the convicted person's income for a period of up to 3 years;
• imprisonment for up to 6 years (on a very large scale of damage).

2. Administrative liability (Article 14.12 of the Administrative Code of the Russian Federation):
• fine for the legal entities up to RUB 300,000.

3. Civil liability:
• cancellation of transactions aimed at deliberate bankruptcy;
• the duty to compensate the losses to creditors.

4. CEO disqualification:
• a ban on holding senior positions for up to 3 years.

Decrease in the company's liquidity level. If a company does not have enough current assets to cover current liabilities, this is the first red flag.

Worsening of the financial condition based on the analysis of ratios. Important indicators, such as ratios of current and absolute liquidity, financial stability and liability coverage ratio, make it possible to identify the worsening of the situation long before the crisis.

Growth of number of arbitration cases in disputes related to fulfillment of obligations. The presence of many debt collection claims indicates problems with solvency.

The appearance of active writs of execution for overdue debts, taxes and wages. If a company does not meet its obligations to employees and public authorities, this is a clear indicator of financial difficulties.

Excess of liabilities over assets. If the company's long-term and short-term liabilities exceed the value of its assets, this indicates possible insolvency.

Losses of previous years. If a company accumulates losses from year to year without taking remedial actions, this increases the likelihood of bankruptcy.

Growing debt load. If the debt load is constantly growing, and the profitability of the company falls, financial stability is threatened.

Globas provides a set of risk assessment tools:

Using Globas allows you to recognize in advance the financial problems of the company and make informed decisions. Monitoring of arbitration cases, financial ratios and Liquidity Index helps to avoid cooperating with problem counterparties and minimize risks.