Sanctions compliance is complex and involves understanding both the national sanctions programs and the conduct or “smart” sanctions programs. Avoiding issues with the Office of Foreign Assets Control (OFAC) involves more than simply checking the computerized Specially Designated Nationals (SDN) list to see if a certain name appears on this list. Companies must have policies in place to ensure adequate due diligence. They must understand with whom they are dealing and take adequate steps to make sure they are not being taken advantage of by a SDN using a strawman. Some of the questions to be asked are: Who is the beneficial owner? Who controls an entity? Are there intermediaries, agents or others involved in the transactions that are SDN’s?
OFAC regulations are not straight forward or easy to understand, and the sanction programs are constantly shifting. To supplement the written guidance it provides, OFAC issues “Frequently Asked Questions” or FAQ’s. Therefore, any compliance program has to be continuously reviewed and updated to include the latest OFAC guidance. There are also times when companies need advice concerning the applicability of sanctions to a particular transaction of the meaning and scope of a general license or the meaning and scope of the Sectoral Sanctions List.
Companies also need to be aware not only of American sanctions, but also sanctions from the E.U. and other countries around the world. In the Russian Federation, the government has issued “counter-sanctions” aimed at specific American or European concerns. These sanctions are retaliatory in nature. Nevertheless, for companies conducting business in the Russian Federation, these sanctions must be taken into account and harmonized with U.S., E.U. and other applicable sanctions regimes. For matters arising in the Russian Federation, we work with one of Russia’s top attorneys, Dimitry Magonya [link to bio] and his firm, Art de Lex [link to firm]. Art de Lex has attorneys who understand not only Russia’s counter-sanctions but also corporate issues and business organizations unique to Russia.
There are also times when a transaction or a payment may be rejected by a bank or other financial institution for sanctions related issues when, in fact, the sanctions do not apply. In some cases, a bank or financial institution may notify third parties that a company or individual is under sanctions when, in fact, they are not thereby ruining the reputation of the company or individual and interfering with its business operations.
We assist with the analysis of a transaction and/or the creation of a compliance program. We can also take corrective actions against banks or financial institutions that wrongfully reject transactions, including instituting litigation.