MANAGING SANCTIONS COMPLIANCE CHALLENGES
RC: What are some of the key challenges facing businesses in terms of sanctions compliance?
Camilli: One key challenge facing businesses is keeping up with the various sanctions regulations in all of the jurisdictions in which they do business. There are hundreds of lists globally that can change frequently, leaving companies struggling to find new innovative solutions to keep up with the changing regulatory landscape. In addition, the new Ukraine-related sectoral sanctions can be complex, and several directives have been issued with little interpretive guidance, leaving companies with many unanswered questions, including how they will be enforced. Another challenge that many companies face is ensuring that they are not in a position where they are ‘facilitating’ trade to sanctioned countries through third parties. Many US sanctions programmes prohibit facilitation and that requires a careful evaluation of your business transactions. Lastly, companies face challenges when evaluating a company’s ownership structure when screening entities to determine if the entity is owned 50 percent or more by one or more blocked persons under the revised Office of Foreign Assets Control (OFAC) guidance given last year.
Cone: Moving targets, trap doors, foggy legal landscapes and aggressive treasure hunting by government regulators are among the key challenges. When it comes to sanctions regimes and the prospect of enforcement actions, the lack of regulatory transparency combined with the downside of severe financial consequences and business disruption present significant challenges for effective internal risk management. To make things worse, a company engaged in international commerce cannot content itself with tackling the sanctions regime of its home state. The US and UK sanctions regimes boast extraterritorial tentacles that ambush unwitting violators by surprise, and if a foreign business partner’s home state currently lacks its own sanctions regime, it may soon join the growing chorus of countries that do. To complicate things further, in the US there are a number of sanctions regimes administered by different agencies such as BIS and OFAC. Accordingly, thorough risk management requires navigating a kaleidoscopic patchwork of domestic and foreign laws.
Jul-Sep 2015 Issue
Baker & McKenzie
Grant Thornton, LLP