Historically, the U.S. and EU were in sync with regard to international sanctions. However, in recent years, the US has decided to pursue an independent sanctions policy. Despite this, there are certain countries that are facing sanctions from both the U.S. and the EU. These countries include Russia, Iran, North Korea, Syria, and Venezuela. Companies engaged in international trade must ensure that avoid doing business in these countries, as this may expose them to sanction risks, reputation risks, as well as economic risks. For example, U.S. sanctions on Russia may force you to reconsider transacting with companies from the region.
EXTRATERRITORIALITY OF U.S. SANCTIONS ON EU COMPANIES
Another factor to keep in mind is the extraterritoriality of U.S. sanctions on EU companies. The recent differences in sanctioning strategy between the U.S. and EU have meant that companies from Europe are more susceptible to U.S. sanctions. Individual companies based in the EU who are trading with embargoed jurisdictions are vulnerable to sanctions from the U.S. In order to avoid these sanctions, European companies must take into account the guidelines issued by the U.S. government.
LATEST OFAC ENFORCEMENT CASES AND LESSONS LEARNED
Similarly, companies must also be aware of the actions undertaken by the Office of Foreign Assets Control (OFAC). In recent months, OFAC has started to delve deeper into the operations of companies in order to see if any sanctions are applicable. Such a deeper law enforcement policy is not limited to the core operations of a firm. The OFAC is also looking at the entire supply chains and marketing activities of firms. Therefore, businesses must be extremely cautious in terms of engaging with firms from U.S. sanctioned countries.
YOUR COMPANY’S NEXT STEPS
For more information about international sanctions and how to deal with them, please contact us.