GROWING ECONOMIC SANCTIONS AND EXPORT CONTROL RISKS – AND HOW COMPANIES CAN MANAGE THEM
Since the Russian invasion of Ukraine, the topic of economic sanctions and export controls has entered the mainstream. From a layman’s perspective, economic sanctions are government-imposed restrictions on economic activities to achieve foreign policy or national security objectives. However, what is not well understood is that these measures can target entire nations, as well as specific industries or individuals. Sanctions may include trade barriers, tariffs, restrictions on financial transactions, and asset freezes.
While intended to exert political or economic pressure, sanctions can also lead to unintended consequences for businesses, such as disrupted supply chains, legal penalties and reputational damage. As geopolitical tensions rise, the scope and complexity of sanctions are growing, making it essential for companies to stay informed and compliant.
Specialist restrictions on trade can take the form of export controls, which are regulations that govern the export of sensitive technologies, goods and services that could impact national security or foreign policy. These controls aim to prevent the proliferation of weapons, protect national security and uphold international agreements. They apply to various industries, including defence, technology and manufacturing. Violating export controls can result in severe penalties, including fines, revocation of export privileges and imprisonment. Companies must understand these regulations and ensure that their products and services comply with the relevant laws.
Over the past two decades, EU and US sanctions programmes have undergone significant transformations, becoming more sophisticated, targeted and responsive to the changing geopolitical landscape.
Oct-Dec 2024 Issue
Kaval Inc.