Sanctions are one of the tools of international law used to influence countries, organisations, and individuals. Their primary aim is to prevent human rights abuses, military conflicts, and other global threats. The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury is the main regulator of the sanctions regime. This organisation is responsible for implementing and enforcing economic sanctions aimed at supporting US national security and foreign policy. Let’s explore what it means to be under sanctions, the reasons for their sanctioning, and the potential consequences for both individuals and countries.
Understanding Sanctions
Sanctions are punitive measures taken by one or more countries against a nation, individual, or entity. They are an instrument of policy enforcement, a means of penalizing or expressing disapproval without resorting to direct military conflict.
Sanctions can take many forms:
- Economic sanctions often include trade barriers, import duties, or restrictions on financial transactions.
- Diplomatic sanctions could involve limiting diplomatic ties, banning certain officials from traveling, or even expelling a country’s diplomats.
- Military sanctions may include arms embargoes or other restrictions on military support.
- Sports sanctions could prevent a country from participating in international sporting events.
Breaching sanctions can lead to severe consequences, including penalty and legal punishment. Businesses and individuals found violating sanctions may face significant fines, asset freezes, or even criminal prosecution. In addition to financial penalties, the punishment can also include restrictions on future business activities, damage to reputation, and potential bans from operating in certain markets.
The Process of Imposing Sanctions
The process of imposing sanction often starts at an international level. Organizations such as the United Nations, OFAC or regional bodies like the European Union can impose financial sanctions. Individual countries can also enforce their own sanctions, often in tandem with international sanctions.
The process typically involves an assessment of the offending actions, followed by the determination of an appropriate punitive measure. Before engaging in certain business activities, companies may need to secure official permission to ensure compliance with these sanctions, as decisions are influenced by a range of political, economic, and legal factors.
What Does it Mean When a Person is Sanctioned?
Sanctions against individuals can be imposed for a variety of reasons. They might be applied to you due to political and economic offences, human rights violations, or involvement in terrorist activities. Examples of people who have been subject to sanctions include:
- In 2021, the US imposed sanctions on Russian businessmen and government officials for interfering in American elections and participating in cyberattacks. These actions were seen as a threat to the national security of the US.
- Sanctions against Syrian citizens linked to Bashar al-Assad’s regime were imposed for human rights violations and participation in war crimes during the Syrian civil war. Specifically, individuals responsible for attacks on civilians faced asset freezes and travel bans.
- In 2022, OFAC imposed sanctions on Venezuelan citizens for their involvement in corruption schemes related to the state oil company PDVSA. These individuals are suspected of money laundering and misusing public resources, leading to an economic crisis in the country.
When an individual is placed under sanctions, they are automatically added to the SDN (Specially Designated Nationals) list, which is managed by the OFAC (Office of Foreign Assets Control). Being included on this list brings with it consequences such as:
- Freezing assets under US jurisdiction involves blocking all financial and material assets located within the US territory or controlled by American entities, rendering access to them impossible.
- A ban on conducting business with individuals and organisations from the USA – any commercial and financial transactions with American individuals or legal entities become illegal, leading to economic isolation;
- Travel restrictions and visa bans for individuals subject to legal sanction can result in visa denials and entry refusals to the USA, as well as to countries that support the sanction regime, significantly limiting their freedom of movement.
For those who find themselves on the list and wish to have their name removed our lawyers provide SDN legal services. Our OFAC sanctions lawyers have many years of experience working with SDN lists and will provide you with expert legal protection of your rights and interests.
What Does it Mean for a Country to be Sanctioned?
Sanctions against countries are aimed at preventing violations of international law and serve as a means of exerting pressure on a state’s political course. They can be imposed for violations of international legislation, aggressive actions, or support for terrorism. There are various types of sanctions applied against countries: trade embargoes, financial sanctions, and restrictions on diplomatic relations.
Besides, other nations are prohibited from doing business with sanctioned countries, as they can face secondary sanctions. Those are punitive measures imposed by one country on individuals, companies, or governments that engage in business with sanctioned entities.
Several countries against which sanctions have been imposed:
- Sanctions on Iran are imposed by the UN, the EU, and the USA due to its development of a nuclear programme. This has led to various restrictions, including an oil export embargo, asset freezes, limitations on financial transactions, and visa bans. As a result, the economy is experiencing stagnation, the national currency is depreciating, and international investments have significantly decreased.
- North Korea sanctions have been imposed due to nuclear testing and the development of ballistic missiles. These restrictions include a ban on the export of key resources, asset freezes, and limited access to global financial markets. As a result, the country is facing severe economic difficulties and isolation from international economic relations.
- Russia sanctions were imposed by the EU and the USA in 2014 in response to the annexation of Crimea and the destabilisation of Ukraine. These measures include a ban on exporting technologies, freezing assets, financial restrictions, and individual sanctions against officials. As a result, the country faced a decrease in foreign investment, devaluation of the rouble, and limited access to international credit markets.
Thus, they create significant barriers to economic development and international cooperation, exacerbating a country’s isolation on the global stage. Adhering to sanctions is an important part of international obligations for companies and individuals. To avoid facing punishment or being placed on SDN list, it is necessary to follow sanctions regulations.
If you’re facing challenges with sanctions compliance, our experienced OFAC compliance attorney will guide you through the complexities, ensure your transactions meet legal standards, and provide quick solutions to any issues related to sanctions regulations. Trust our team to protect your business and keep you compliant.
How to Comply with Sanctions?
Some countries and individuals are subject to sanctions due to violations of requirements set by international organisations or national governments. To avoid negative consequences, it is essential to strictly adhere to sanction laws, as well as follow established rules and procedures aimed at preventing breaches of sanction regimes.
Particular attention should be paid to:
- Conducting checks on counterparties for inclusion in sanction lists. Before entering into international agreements, verify that your counterparties are not listed in the SDN (OFAC) sanctions list or similar EU, UN lists. This will help avoid inadvertently breaching sanctions regimes, which could result in substantial fines and reputational risks.
- Adherence to financial and trade restrictions is crucial. Financial transactions and trade dealings with entities under sanction can lead to the freezing of assets, fines, and legal proceedings. Sanctions may affect not only direct transactions but also intermediary operations, as well as contracts with third parties involved in supply chains.
- Consultations with lawyers specialising in international law are recommended for the correct interpretation of sanction regimes. Sanction legislation is complex and constantly changing. We advise companies and individuals to seek professional legal assistance from sanctions lawyer.
Faced Issues with Sanctions Compliance?
Our OFAC sanctions lawyers can provide you with comprehensive support and professional solutions. We offer a full range of services, including analysis of sanction requirements, assistance in compliance, OFAC release of blocked funds, protection of your rights and interests, as well as support in international matters. Our team of sanctions lawyers can help remove you from sanction lists and restore access to international markets. Contact us for a consultation, and we will develop a tailored strategy to effectively address your situation.
