AMLAML/CFT Act

What Are Sanctions?

By March 7, 2022 No Comments

For over 50 years, the United Nations Security Council (UNSC) and other international bodies have used sanctions to prevent escalation of or settle conflicts, curtail nuclear proliferation and counter-terrorism and human-rights violations. Individuals or organisations can face sanctions where they engage in illegal activities, including money laundering, terrorism and terrorist financing.

Sanctions take on several forms: economic, diplomatic or concerning participation in international sport. Economic sanctions impose financial penalties restricting commerce, banning trade and financial relations. When applied to individuals, sanctions will freeze a person’s assets and include travel restrictions. The UNSC publishes a Consolidated Sanctions List which consists of all individuals and entities subject to UNSC sanctions measures.

The Office of Foreign Assets Control (OFAC) in the United States published a list that includes the individual companies owned, controlled or otherwise related to targeted countries.

It is vital, considering the global landscape in which we all operate, that organisations are aware of and can successfully navigate the network of international sanctions. Failure to comply with sanctions can lead organisations to serious legal, financial and disastrous reputational consequences.

Recent Sanctioning of Russia

The world has responded to the recent Russian invasion of Ukraine with immediate and extensive sanctions. The European Union and the US have imposed sanctions simultaneously as major international players such as Nike, Maersk and Boeing have ceased operation in and with Russia. As a result, the Ruble took a nosedive, and Russians lined up at ATMs to withdraw cash, fearing a complete breakdown of electronic banking. The Kremlin has responded by banning foreign currency transfers abroad, and exporters are required to transfer a majority of their foreign currency into rubles. The sanctions are impacting consumers; reports out of Russia say the price of electronics and appliances has already increased.

Those working for foreign companies within Russia face uncertainty regarding their ability to be paid as several Russian banks are removed from SWIFT (the international messaging system used by banks for financial transactions). Mastercard and Visa have blocked sanctioned Russian companies from accessing their payment networks.

The sanction has impacted Russian tourists returning to Russia as more and more countries ban Russian flights from their airspace. The penalties are some of the toughest seen in recent times and are impacting not only businesses and business owners but are designed to flow down to the lower end of Russian society.

Russia is now an economically isolated nation.

How can One AML help?

If your business operates internationally, you can ill-afford to be the subject of sanction violations. Organisations should have robust policies that ensure they remain compliant in this complex and rapidly evolving space. One AML can work with your team to ensure that your policies are best practice, especially concerning the necessary level of national and international screening of your clients. Contact our specialist team today if you want a comprehensive review of your current policy or if you require expert guidance as you develop your compliance processes.

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