Compliance

Sanctions laws and guidance provisions are complex and in constant flux, changing in line with national and international shifts in the political landscape. This fluidity poses a particular challenge to individuals and firms seeking to comply with sanctions, requiring them to keep up to date with changes and modify their dealings accordingly. Sanctions are imposed by numerous countries and bodies and can have an impact on operations and conduct globally in a variety of contexts. Breaching sanctions can result in civil, criminal and regulatory liability resulting in substantial fines and reputational damage.

Individuals and entities are well advised to assess the nature of their activities and businesses, including products, services, supply chains and the regions where they operate, to devise an appropriate compliance framework. This framework must be dynamic and capable of responding rapidly to changes in the sanctions landscape.

Compliance advice

The authors of this site have advised a range of entities and corporations from SMEs to publicly listed multi-nationals, charities, NGOs, and individuals, in relation to the design, implementation and on-going review of their sanctions compliance programmes, as well as providing advice on particular issues relating to sanctions and export controls. Please contact us for further information.

Designing an effective compliance programme

To design an effective sanctions compliance programme entities should, for example:

• Undertake an analysis of their operations to identify global sanctions applicable to their business
• Perform a risk assessment
• Ensure that their control framework operates effectively to mitigate sanctions risks
• Implement a due diligence and screening system which is sensitive to the level of risk posed by different third parties, types of transaction and geographical factors
• Include contractual clauses and warranties to protect the company when engaging with third parties
• Clearly set out their policies and procedures in relation to sanctions
• Communicate the sanctions policy to employees and third parties to ensure that it is recognised and understood
• Train relevant individuals to identify sanction risks and apply the company’s policies and procedures
• Ensure proper oversight and ongoing monitoring of their programme
• Implement clear escalation procedures for the identification and resolution of sanctions issues which do arise
• Cultivate and promote a culture of compliance amongst staff and business partners

Compliance issues faced by businesses

Issues which arise in the context of day-to-day business operations often require input from sanctions specialists. For example:

• Advising on trade restrictions, sanctions or export controls
• Advising on risks in relation to specific commercial transactions, corporate financing, corporate restructuring
• Advising on the impact of sectoral or country-specific sanctions
• Drafting contractual clauses offering additional protection in higher risk situations
• Dealing with contractual obligations when sanctions impact on a party’s ability to perform
• Making/receiving payments where there are applicable sanctions considerations
• Obtaining authorisations and licences from relevant agencies as necessary
• Assessing whether a breach has occurred and initiating an effective response
• Liaising with financial institutions in relation to sanctions issues
• Civil, regulatory and criminal investigations and enforcement action by government agencies
• Making submissions to relevant authorities or courts following an individual or entity being subject to sanctions or asset freezes
• Producing training materials and leading in-house training sessions

Guidance on Compliance with sanctions & export controls 

EU Guidance on Compliance

• Commission Recommendation on internal compliance programmes for dual-use trade controls under Council Regulation (EC) 428/2009, EU Commission, July 2019
• Commission Recommendation 2011/24/EU – ICP elements
• Q&A due diligence on restrictive measures for EU business dealings with Iran, 2019
• Secondary Sanctions’ Implications and the Transatlantic Relationship, UK Finance and Atlantic Council, September 2019
• Risk management principles guide for sending humanitarian funds into Syria and similar high risk jurisdictions, Association of Certified Anti-Money Laundering Specialists (ACAMS), February 2020
• Methodology for identifying high-risk third countries under Directive (EU) 2015/849, European Commission, May 2020
• Due Diligence Helpdesk on EU sanctions for EU SMEs dealing with Iran, October 2020
• Sanctions Tool Iran, October 2020
• EU Commission Guidance Note on the provision of humanitarian aid to countries and areas subject to EU sanctions (Syria, Iran, Venezuela, and Nicaragua), (updated in November 2020).

National guidance

• Belgium: Internal compliance programme guide
• Estonia: Advisory Guidelines of Finantsinspektsioon “Organisational solutions and preventive measures for credit and financial institutions to take against money laundering and terrorist financing”, 2018
• Germany: Federal Office for Economic Affairs and Export Control (BAFA), Guidance on internal compliance programmes, March 2018
• Luxembourg: Internal compliance programme Guide for exporters
• The Netherlands: Ministry of Foreign Affairs Guidelines on internal compliance programmes, January 2020
• Australia: Guide to Export Controls and Best Practices, and self assessment tool
• Canada: Export Control Handbook, 2017
• Hong Kong: Internal Compliance Programme Guidance for Industry

FATF Guidance

• FATF Methodology for assessing technical compliance with FATF recommendations and effectiveness of AML/CFT systems, February 2013 (Updated November 2020)
• FATF Guidance for a Risk-Based Approach to CFT/AML for Legal Professionals, Trust and Company Service Providers, Accounting Professionals, Securities Sector, and the Life Insurance Sector (2018)
• FATF Guidance on Counter Proliferation Financing – Part V Supervision and Monitoring of Compliance (February 2018)
• Virtual Assets – Red Flag Indicators of Money Laundering and Terrorist Financing, September 2020
• FATF Guidance on Proliferation Financing Risk Assessment and Mitigation (June 2021)

The Wassenaar Arrangement

• Compendium of best practice documents, The Wassenaar Arrangement on export controls for conventional arms and dual-use goods and technologies – December 2019
• Industry and Academia – Best practice guidelines on internal compliance programmes or dual-use goods and technologies, 2011
• Introduction to End User/End Use Controls for Exports of Military-List Equipment, July 2014

UN Guidance

• Best Practices Guide for chairs and members of the United Nations Sanctions Committees, Compliance and Capacity Skills International (CCSI), (December 2020)

UK Compliance Guidance

• OFSI General Guide to Sanctions: Chapter 7, Compliance and Enforcement
• OFSI Guidance on Reporting Information
• OFSI Compliance Reporting Form
• OFSI Guidance on monetary penalties for breaches of financial sanctions
• OFSI Maritime Guidance (HTML format)
• OFSI Russia Guidance on financial and investment restrictions
• OFSI Compliance Visits Explained
• Department for International Trade, Export Control Joint Unit, Compliance Code of Practice
• The Charity Commission, Protecting charities from harm: compliance toolkit
• Serious Fraud Office, Evaluating a Compliance Programme
• RUSI – ACAMS joint report on compliance with non-proliferation sanctions
• Common mistakes in export controls and how to avoid them #financial sanctions, Institute of Export and International Trade
• Financial Conduct Authority (FCA) Financial Crime Guide: A firm’s guide to countering crime risks
  • Chapter 7: Sanctions and asset freezes
• Financial Conduct Authority (FCA) Financial Crime Thematic Reviews Chapter 8: Financial services firms’ approach to UK financial sanctions (2009)

US Compliance Guidance

• Framework for OFAC Compliance Commitments
• Starting an OFAC Compliance Programme
• Compliance for Internet, Web Based Activities, and Personal Communications
• Compliance for the Insurance Industry
• OFAC Art Advisory, October 2020
• Additional Questions from Financial Institutions
• Department of Commerce Bureau of Industry and Security, Compliance Guidelines: How to develop an export management and compliance programme, November 2013
• Department of Commerce Bureau of Industry and Security, Country Guidance
• Banking Part 504 Regulations AML/sanctions compliance programmes, New York State Department of Financial Services (NY DFS), and ACAMS Guidance, 2017
• Department of Commerce Bureau of Industry and Security, Export Compliance Guidelines, January 2017
• Department of Justice, Evaluation of Corporate Compliance Programmes, 2019
• National Strategy for Combatting Terrorist and Other Illicit Financing, 2020
• OFAC, State Department and US Coast Guardian Global Sanctions Maritime Advisory, May 2020
• Department of Commerce Bureau of Industry and Security, Russia, Pakistan, and Hong Kong Due Diligence Guidance
• OFAC Sudan Programme and Darfur Guidance, as of 11 August 2020
• State Department Guidance on human rights compliance for products and services with surveillance capabilities, September 2020

Wolfsberg Group

• Wolfsberg Guidance on Sanctions Screening