Keeping abreast of sanctions developments
10 Oct 2019 10:17 am by Mark Dunn
With little prospect in sight for an end to Russian military action in Ukraine in 2015, the EU's Council of Ministers released a statement specifying that "the asset freeze and travel bans against 149 persons and 37 entities have been extended until 15 March 2016".
Between March and December 2014, around 40 different individual amendments were made to the scope of these sanctions, illustrating the complexity of managing a proactive and effective sanctions programme for organisations conducting business globally.
Despite the many amendments and the most recent extension, there has still been movement in a positive direction, with a recent ceasefire being honoured in Ukraine, prompting French President Francois Hollande to propose a meeting of the leaders of France, Germany, Russia and Ukraine in Paris later this month to discuss a resolution.
The French President did, however, recognise that several conditions of the initial peace deal, reached last February, have yet to be met. These conditions include holding local elections, decentralisation reforms and the granting of more autonomy to two pro-Russian areas in the east.
Russia, which continues to deny any engagement in the conflict, has condemned US and EU sanctions, declaring them as ineffective and counter-productive to a joint peace effort. In addition, travel restrictions have been placed on more than 80 EU officials, and EU imports of a number of goods, including food, have been banned in Russia.
In other areas of the world where sanctions have been a significant policy feature for some time, things are changing. In July 2015, a historic agreement was reached in Vienna between Iran and the UK, US, France, Germany, Russia and China. In exchange for Iran dismantling its nuclear infrastructure, the UK, EU and US will remove many of the sanctions that have been choking the Iranian economy for the last nine years.
The lifting of the sanctions in Iran will not happen overnight. Sanctions will remain in place until Iran has complied with the various commitments it has made, but over time it is expected that many sanctions related to its nuclear programme will be lifted. This will provide a significant new market for businesses around the world, as Iran is a country with a population larger than the UK and an economy worth more than $400 billion annually.
The lifting of sanctions against the country will unlock hundreds of billions of currency that is currently in blocked bank accounts. This can be used to kick start the economy and some estimates suggest that this could lead to a doubling of the growth rate within a year.
Yet businesses planning a move into Iran would be well advised to act cautiously and practice a high level of due diligence in the country. An August 2015 report from the Basel Institute on Governance entitled Basel Anti-Money Laundering (AML) Index ranked Iran as the highest country in terms of risk rating for money laundering and terrorist finance. Some sanctions may be lifted but others will remain in place, particularly those related to Iran's human rights record and support for terrorism.
Businesses wishing to remain compliant need to demonstrate a proactive and persistent level of due diligence, consistently monitoring sanctions lists for potential risks and changes. Sanctions change regularly, so it is imperative to have access to up to date information in order to run an effective diligence programme.
- EU updates its sanctions best practises document
- Paypal issued £5M fine due to inadequate sanctions screening process
- Sanctions 101: An introduction
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