Challenges of sanctions lists screening and the impact of sanctions triggered by conflict zones

Szilvia Andriasik
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Szilvia Andriasik: Senior Compliance Manager, Bilfinger, Germany

Journal of Financial Compliance, 2023, vol. 6, issue 4, 298-309

Abstract: This paper emphasises the importance of sanctions policy and the role of different sanctions regimes triggered by various conflict zones today and in past decades. Based on examples of sanctions against Iraq, the Russian Federation and Venezuela, it highlights the difference between traditional embargo-style sanctions and recently introduced sectoral sanctions specifically targeting specific economic sectors. The paper also discusses coordination efforts between different sanctions regimes towards a global sanctions policy through the experience of the sanctions against the Russian Federation, as well as a new human rights sanctions regime. On the other hand, different political considerations can also lead to a clash of sanctions regimes. The paper discusses the impact of divergent international relations with Iran on sanctions when the United States withdrew from the Iran nuclear deal in 2018, reinstating secondary sanctions against Iran and causing legal and economic challenges for companies within the European Union (EU). Based on the recent preliminary ruling of the Court of Justice of the EU in the Bank Melli v Telekom Deutschland GmbH case, the paper points out the main considerations regarding the blocking statute activated by the EU in order to protect enterprises within the EU from the extraterritorial effect of foreign sanctions laws. In addition, the paper features the possible criminal as well as civil law liability for sanctions violations in different jurisdictions, highlighting some examples such as sanctions law offences by BNP Paribas. In the light of the possible penalties and financial losses caused for companies, the paper sets out a comprehensive decision matrix for experts and decision makers who want to evaluate whether another entity is sanctioned or has sanctioned ownership in a certain jurisdiction. Finally, it elaborates which technical add-on features a sanctions list screening software should possess in order to detect and manage sanctioned entities.

Keywords: sanctions; extraterritoriality; Consolidated Financial Sanctions (CFSP) list; UK sanction list; Office of Foreign Assets Control (OFAC); sanctions diplomacy (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jfc000:y:2023:v:6:i:4:p:298-309

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