Supply Chain Enabled

Managing Sanctions – what to consider

Published: March 13, 2022
Author: Keelin Rowan

The imposition of new sanctions, following the invasion of Ukraine, will need to be enforced and managed by organisations in Ireland and around the world.  These sanctions have been imposed by the EU, as well as the UK, US, Canada, Japan, and others.

We have talked about trade compliance and managing sanctions previously, but with the current changes requiring a renewed focus, we take a look at what companies need to consider in ensuring they are compliant with sanctions imposed.

Firstly, the more recent sanctions imposed on the sale of goods and services to date include;
  • Stringent export controls that have been put in place on exports to Russia, Russian state-owned entities, Russian subsidiaries, Russian individuals
  • Dedicated sanctions on Belarus, for exports to Belarus, Belarusian individuals, or for use in Belarus. Some of the prohibited goods include those under the categories of electronics, computers, telecommunication, information security, and more.
  • Further restrictions on the trade of specific goods and industries, dual-use goods, industrial and military technology, aviation.  This list of restrictions may continue to fluctuate.

For more specific detail regarding sanctions imposed by the EU, a summary can be found here , on the Ireland Revenue website, or the detailed journal information on EU regulation changes can be found here.  Update 30th March Useful representation of the EU sanctions from the Council of the EU and the European Council.

Since it is not just the EU that are deploying sanctions, and the details of each regulation change can differ, it is imperative that your organisation retains access to updated controls listings.  Such listings can be found via several sources, including subscription, but your trade compliance team can investigate fully as to which sources suit your company best.  Ensuring your source is stringently maintained and uptodate, allows you the peace of mind in knowing that you are compliant with these international trade obligations.

As with other sanctions and export or import controls, the complexity for an organisation is how to manage the sanctions and ensure your compliance in a controlled way.  Each company will have their own approach to trade compliance, but with constantly changing regulations, this process can be complex.

  • Maintaining oversight on exports to countries, such as Russia or Belarus, can be managed reasonably easily.  A list can be maintained and checked against to ensure no orders are fulfilled to specific countries.
  • Ensuring compliance with the regulations around export controls to individuals can be a very complex and time consuming undertaking.  Using an integrated trade compliance technology solution will help here, as automated checks can be carried out on large volumes of transactions, ensuring there is no shipment to or indeed financial transaction with a denied party.
As mentioned in earlier posts within our Supply Chain Enabled™ blog, not maintaining compliance with regulations is not an option for your business.

Non-compliance can have significant impacts in terms of fines and penalties and can also lead to criminal prosecutions.  With penalties including the withdrawal of your company’s ability to trade internationally, a focus must be placed on ensuring your business has trained compliance personnel, and does not require over reliance on 3rd parties, as the ownership for compliance remains with you.

The Department of Enterprise, Trade and Employment in Ireland advises “EU sanctions regulations have direct effect in all Member States of the EU, and, as such, are legally binding on all natural and legal persons in Ireland.  Private companies, therefore, have an obligation to ensure that they are in full compliance with these new measures.  A natural or legal person who contravenes a provision of an EU sanctions regulation shall be guilty of an offence and liable to prosecution.”

The denied party screening process that your company undertakes will be the key element to the monitoring of your exports in line with all sanctions imposed.  As mentioned, having as automated a process as possible will be a benefit given the volume of sanctions and controls, as well as the volume of transactions your business will experience.  Whatever approach you decide to take as a business, your screening process should identify a potential breach of the regulation, as early as possible.

Take a look at the order management process for your business, for example.  The screening process deployed by your organisation should validate not only on the country from which the order is placed, but the entity itself and the bill to and ship to destination.  The name of the bill to or ship to person or entity must also be validated, with a stop placed on the order to ensure it does not proceed further.  This will help to ensure your compliance, as that stop can be place before any financial transaction occurs.  A secondary process can then be undertaken to validate the stop placed, and ensure that the person or entity screened, does indeed match the party as listed in the denied party screening listings.

While only one area of trade compliance, the denied party screening process that supports your business is a key tool to ensure you remain compliant now, and into the future.

We recognise this isn’t an easy undertaking.  Trade compliance is a complex activity for many organisations.  If you are looking for support in any area of trade compliance, or indeed are unsure where to start, we would love to hear from you.

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