Sanctions Compliance: deep sanctions check of counterparties in Globas
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In the recent years, the Russian business faces the large number of new risks. Risks revealed especially sharply in the ongoing sanctions pressure, counter-sanctions regulation as response to sanctions, as well as in many novellae leges and changes in the Russian legislation.
Currently, compliance procedures are not limited to sanctions screening, but also include keeping the Register of Foreign Agents and related parties and checks against the list of PEPs.
What sanctions does the Russian business need to comply with, what additional sources are used for the deep check of counterparties, and how the functionality of the new Sanctions Compliance module in Globas will help to carry out the deep check of the Russian and foreign counterparties - this is what our April Newsletter is about.

Sanctions flywheel gains momentum

Sanctions are measures taken by governments and international organizations to restrict economic, political or other types of relations with a certain country, organization or part of the territories. Sanctions may include a ban on the export and import of goods, restrictions on financial and banking transactions, entry bans for certain individuals, asset freezes, and other measures.
Over the past year, Russia has been subject to extensive sanctions by a number of states and organizations. Such beneficiaries of sanctions as the USA, the European Union, Great Britain, Canada, Switzerland applied new types of restrictions and programs with each new package of sanctions. At the same time, within one country, there may be several different sanctions regimes, which are controlled by different departments and branches of the government.
Secondary sanctions also affected Belarus, as well as Russia's partners around the world. Some countries that did not previously use sanctions measures have now introduced their autonomous sanctions regimes at the legislative level. For example, Poland and New Zeeland.
Russian persons are bound only by sanctions imposed by Russia itself, as well as sanctions approved by the UN Security Council, of which Russia is a permanent member. Thus, Russia is participating in the coordination of the introduction of various restrictions.
Many organizations and individuals must take into account the presence of sanctions risks, depending on the specifics of their business. This is especially important for persons conducting foreign economic activity, for branches of foreign companies, banks, non-residents of the Russian Federation and companies that deal with foreign partners and use foreign currency for settlements. Screening for sanctions is an important security measure for such entities.
Due to the variety of sanctions regimes and sources, manual verification of the presence of sanctions risks becomes difficult. Given the current geopolitical situation, we can conclude that the sanctions rhetoric of some global political players will not weaken, but most likely will only increase.
To thorough check of a counterparty for sanctions risks, it is necessary to take into account all possible threats and conduct a research efficiently and quickly.
Sanctions Compliance, a new Globas product, will assist in reducing time for partners screening and carring out full compliance control if necessary.

Sanctions Compliance in Globas

The Sanctions Compliance module contains detailed information on sanctions and restrictions, including the 50% Rule, as well as additional sources and deeper analysis of companies, individuals and objects under restrictions.
Sanctions Compliance facilitates the process of sanctions check by providing many options:
  • many disparate sources are combined into one consolidated list of restrictive measures of 14+ countries and organizations;
  • information in the sources, presented in national languages, translated into Russian;
  • automated check against 40 new criteria for the presence of sanctions risks, including all counterparties in one list;
  • all related parties are also checked automatically;
  • extended types of restrictions, programs, issuing bodies and dates of sanctions;
  • additional checklists: Russian politically exposed persons (RPEP), Foreign Agents and related parties, Companies with a ban on transactions with shares and others;
  • regular update - our experts process data simultaneously with their publication in original sources;
  • free search for objects among the sanctions lists: organizations, individual entrepreneurs, individuals, water and air transport, mass media, trademarks;
  • the result of the check is in the form of a detailed formalized report that can be customized and downloaded.

Important additional compliance check

In addition to the sanctions lists, there are also other restrictive registers, the keeping of which is regulated by the legislation of the Russian Federation.
On December 1, 2022, Federal Law No. 255-FZ of July 14, 2022 “On the Control over Activities Carried out by Persons under Foreign Influence” came into force. According to the Law, persons under foreign influence can be recognized as foreign agents.
A foreign agent is a person who has received support from foreign sources or is under foreign influence.
Among the restrictions and prohibitions associated with the foreign agent status, the following could be highlighted:
  • prohibition of participation in the procurement of goods, works, services to meet state and municipal needs;
  • restrictions on the application of the simplified tax system;
  • prohibition of the use of simplified methods of accounting, including simplified accounting (financial) reporting;
  • ban on the production of information products for minors;
  • ban on educational activities;
  • cash insurance restrictions;
  • ban on organizing public events.
Violation of the legislation of the Russian Federation on foreign agents entails administrative, criminal and other liability.
Given the specifics of one's business, it may also be important to check partners for the inclusion in the Register of Foreign Agents, as well as Persons Affiliated with Foreign Agents.
Using the Sanctions Compliance module in Globas, you can check whether your counterparties are included in the Register of Foreign Agents, as well as in the Register of Persons Affiliated with Foreign Agents. The module also allows to check if persons were previously included in the Register.
For additional check of counterparties, it is worth paying attention to checking individuals belonging to the category of Publicly Exposed Persons (PEPs). Such persons should be under special control by companies that are subjects of No. 115-FZ Federal Law in order to prevent possible abuse of their position. For this purpose, companies must track PEP-related transactions, identify the sources of the capital, and report these transactions to Rosfinmonitoring if it is beleived such sources may be related to money laundering.
The Sanctions Compliance module contains a list of PEPs, which includes both active and archived PEPs records. Check of individuals may be conducted in a separate PEP list, with the use of Requires attention factors in the company profile and in the Sanctions Compliance report.


Sanctions Compliance

A new module has been added to Globas for deeper sanctions check of counterparties. The check is conducted by over than 40 new criteria. The new module contains extensive information about the imposed sanctions and restrictions, including the 50% Rule, additional sources and deeper analytics on companies, individuals and objects that are subject to restrictions and various negative registers.

Active Globas users have an opportunity to try out the module at no cost. To get trial access, please, send a request or contact your manager.
Parallel import: how to check the reliability of suppliers using Globas
Photo: unsplash.com
Over the past year, large-scale sanctions were imposed against Russia by a number of states and organizations. Export bans on the supply of key and necessary goods, as well as geopolitical measures of a financial and economic nature have led to the rupture of the usual supply chains from abroad and the withdrawal of many companies from the Russian market. Taking into account the new global and political reality, parallel imports were legalized.
Parallel import is the process of importing goods to Russia produced in other countries without the official permission of the copyright holder.
In order to develop new markets, stabilize and protect the Russian economy, and prevent shortages of important goods, the Federal Law No. 213-FZ of 06/28/2022 was adopted, legalizing parallel imports. Goods, that can be imported without the permission of the copyright holder, are provided in the list of the Ministry of Industry and Trade.
Parallel imports have become a significant share in the total trade turnover of Russia with other countries of the world, especially in the Asian regions.
In 2022, the trade turnover between Russia and China increased by 29,3% in annual terms. At the end of the year, the figure was a record 190,27 billion USD. This was reported by news agencies with reference to the data of the Main Customs Administration of the People's Republic of China. The trade turnover with India in 2022 increased by 130% in annual terms and reached 31 billion USD. Also, according to the statement of Denis Manturov, the Minister of the Ministry of Industry and Trade of the Russian Federation, in 2022 the trade turnover between Russia and the UAE increased by 68% compared to 2021 and reached 9 billion USD.
Official data confirm the turn of the global Russian economy to the East, and such a significant increase in trade turnover with Asian countries shows a significant restructuring of business in a new direction.
Building new partnerships with counterparties allows not only to establish import supply chains of goods and technologies, but also to promote domestic products to foreign markets.
However, without due diligence and deep analysis of the counterparty, cooperation with foreign companies is associated with the risks of financial losses. There is a risk of entering into transactions with an unreliable company, the risk of supplying counterfeit or defective goods.


Foreign company reports

Using Information and Analytical system Globas you can check counteparties around the globe. Companies registered in Kazakhstan, Kyrgyzstan, Belarus, Moldavia, Tajikistan, Latvia and Ukraine are included in the subscription. If your counterparty is registered in another country, Globas can provide an online report or fresh investigation.

Fresh investigations are being prepared by experts of the Information Agency Credinform in cooperation with a wide network of local experts. The document complies with international standards and includes, in particular, registration data, management, shareholders, types of activities, balance sheet, profit and loss statement. Taking into account the changed conditions, a unified risk assessment of foreign companies has been added to offline reports. The expert opinion also includes an analysis of the company's activities, a study of the financial condition, checking for sanctions, debts, participation in court proceedings, etc. Experts opinion on maximum credit and credit risks are based on the analysis of financial statements and the facts of the partner's activities. The experts of the Information Department additionally search for affiliates and subsidiaries in Russia, and verify participation in legal proceedings and enforcement proceedings in Russia.
Along with commercial due diligence when choosing a partner, it is necessary to mind the following requirements when selling goods obtained by parallel import:
  • only original goods may be subjects of parallel import;
  • the goods must comply with Russian quality and safety standards;
  • the end seller must have all permits;
  • mandatory preservation of the warranty on the goods for the buyer in accordance with the law on consumer protection;
  • if the product falls under the requirements of the labeling law, then such a product needs to be labeled.
When working with a foreign counterparty, it is important to comply with the legislation of the country of each of the parties to the contract and pay special attention to the study of financial sanctions and export-import restrictions.
In addition to the global sanctions lists of the United States, EU countries, Japan, Great Britain, Canada, etc., it is important to take into account Russia's Special economic measures against a number of legal entities and individuals the transactions and any trade and economic activity with whom are prohibited.
Check whether sanctions or special economic measures of Russia have been applied against your counterparty using Globas. Automate your clients and counterparties check with the Sanctions Risks report. The functionality of the report allows you to carry out a comprehensive analysis of legal entities, individual entrepreneurs, divisions and persons for inclusion in the sanctions lists, evaluate indirect and secondary sanctions, including the 50 Percent Rule.