Restrictive measures or “sanctions” are essential to many countries’ foreign and security policies. Most sanction regimes implement the following measures:
- arms embargoes
- restrictions on imports and exports of dual-use items and other sensitive goods and technology, including technical and financial assistance, brokering, and other services
- restrictions on admission (travel bans)
- asset freezes.
Are you mastering the volume of sanctions regulations?
The sanctions landscape is constantly changing and evolving. Exporting companies need to understand sanctions, how they apply to them, and the challenges they face in adhering to them. It’s only through keeping their eye on the ball that they’ll stay on the right side of regulators and avoid sanctions violations.
The challenges for exporters are the following:
- Conflicting regimes: of course, due to the global nature of business, exporters operate across multiple jurisdictions, which often means dealing with conflicting sanctions regimes. This increases the number and complexity of cases that must be escalated and resolved.
- Number and volume of sanctions regulations: More than 35 countries are subject to sanctions. Reading all sanctions regulations (in the EU, Council decisions are adding to the reading list) takes days. Not to speak about amendments and updates at least once a week. Russia sanctions, for example, are now at the 10th package update within one year. Not to mention the readability of such regulations, with the legal wording not always easy to understand, in particular, if rules (and their exceptions) are spread all over multiple places in the text.
- Compliance fatigue: the ever-growing sanctions increase the number of potential sanctions violations that need to be escalated and reviewed before discounting (false positives), adding to the workload of those managing such “alerts”.
- Inadequate screening systems and technology: while screening of financial sanctions and asset freezes against natural persons is offered by multiple providers, the same is not the case for trade restrictions. Have you implemented a system by which you see if a particular product identified by its customs number may be exported to a sanctioned country or if you may provide technical assistance or training on this product? What about restrictions on how to do business with entities in sanctioned countries? Proper sanctions screening processes involve many controls. At a high level, there are three distinct phases: (1) the inclusion of complete and accurate information, (2) the logic behind how matching occurs, and (3) how potential sanctions violations are evaluated. The dynamic nature of existing lists and the introduction of new lists require a near real-time update of lists and testing to ensure this is working optimally.
- Unraveling complex structures: to comply with sanctions, you need to know who your customers are. Identifying who you need to screen, including beneficial owners, often requires understanding complicated organizational structures.
The broad scope of many sanctions regimes and the profound impact on business relations with customers in targeted countries make compliance with all applicable laws a permanent challenge for businesses engaging in international trade and investment.
RespectUs provides easy answers with legal references.
RespectUs has taken a new approach to providing information on sanctions and embargoes. When designing the process, we put ourselves in the role of an exporting company, a provider of technical assistance or brokering, a financial institution, or, in short, any user who wants to know about applicable sanctions.
We are not only displaying or explaining legal sanctions texts. Yes, we are also doing this, but in the RespectUs Knowledge Base (module 1).
When using module 3 of our platform, a user chooses
- the country of establishment or shipping,
- the destination country,
- the product, software, or technology he/she is handling,
- the operation he/she is doing with this product (export, import, transit, technical assistance, brokering, financial assistance, etc.)
As a result, the platform displays if there is a restriction on this particular transaction and, if so, what type of restriction (prohibition, license requirement, etc.). The process does not take more than 2 minutes, and the downloadable report comes with a detailed explanation of the legal sources used (e.g., the European Union regulations and decisions and the national implementation text on the national level of the EU Member State chosen as the country of establishment or shipping). This report may be shown to the Management to demonstrate whether a particular transaction with a sanctioned country is restricted.
The report may be saved in the dashboard and accessed later to prove that the assessment was made on a particular day. It is well understood that the platform is always up-to-date with current sanctions regulations so that you always get the latest information.
We maintain coordinated versions of all sanctions regulations in Our RespectUs Knowledge Base. Financial and other sanctions (travel bans, prohibition to do business) against entities and people are screened through the platform’s Name Check solution (module 4).
In short, the RespectUs is an innovative tool to get information about applicable sanctions and embargoes against countries, entities, and people:
- in real-time, in less than 2 minutes
- without reading any legal text
- in an easily understandable language
- through 4 steps, with an answer to give by the user to a straightforward question
- integrating daily the changes operated by the authors of the sanctions worldwide
- providing a downloadable and storable report
- integrating within two years the sanctions legislations of 50 different countries worldwide and targeting more than 25 sanctioned countries
- providing a clear answer, avoiding infringements that may result in heavy fines, reputational damage, or even criminal prosecution.
