In 2018, the Office of Foreign Access Control (OFAC) announced its desire to pursue enforcement across a wider range of industries, and following this trend, published guidance outlining its expectations for corporations when implementing sanctions compliance programs in 2019. Similarly, the EU has also issued guidance to firms on how to manage internal compliance programs; although the guidance focuses on dual-use trade controls, this reflects general best practices for companies when implementing a proportionate sanctions compliance program. In 2020, the EU also took its second enforcement action against a corporation, for violation of EU sanctions imposed on Syria.
This shift in enforcement actions from traditional financial institutions and continuous attention on all industries has brought to light new areas of focus in the sanctions compliance environment. In addition, recent OFAC enforcement cases have also demonstrated that sanctions liability goes beyond domestic US companies; non-US companies with business activities that have a US “nexus” are considered liable under US legislation, even where the activity occurs outside the US.
Further, sanctions risk for companies has grown significantly over the past few years. Fast-paced political developments have also continued to deliver new breeds of sanctions including increasingly complex western sanctions on Russia and China with retaliating counter-measures on the horizon, all presenting new challenges for firms operating in these jurisdictions. Additionally, the last two years have seen increased focus on tackling corruption and human rights violations through the application of sanctions, including a new anti-corruption regime implemented in the UK this year.
To avoid and prevent penalties, companies are required to have a deeper understanding of the sanctions risks they might be exposed to throughout their operations, both in the US and outside of it.
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For more on Exiger’s Sanctions Response:
The Ultimate Guide to Sanctions Screening Process
Customer Disguises Oil Transactions to Evade US Sanctions
How to Ensure Your Company is Russia Sanctions Compliant