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19 March 2019

Secondary sanctions and compliance challenges in the EU

Francisco Fisher

Whether onboarding new customers or procuring suppliers, multinational companies should know the sanctions policies within—and outside of—the jurisdictions in which they operate. We spoke with Anna Bradshaw, a partner at the UK law firm Peters & Peters, to understand how US Iran sanctions have affected compliance processes for businesses in other jurisdictions, including the EU.

 

Anna Bradshaw of Peters & Peters discusses the compliance challenges for businesses in the EU that relate to US sanctions policy with Iran.

 

According to Bradshaw, companies in the EU that act according to policy within their own jurisdiction only could face major penalties.
"As a result of acting perfectly lawfully in the EU, you could find yourself designated on a list in the US, which effectively makes you the subject of what the US terms a block, in the sense that all of your assets in the US are blocked and any US person is prohibited from dealing with you," she says.

"It’s quite a harsh penalty and the choice then becomes all the more difficult as a result. Do you want what many refer to as 'financial death', or do you want a criminal or civil or administrative penalty imposed on you, depending on where you are in the EU, because each member state enforces the Blocking legislation in their own particular way? That’s a problem."

The uncertainty surrounding the EU Blocking policy makes sanctions compliance—which is already a challenge in terms of identifying sanctioned and sanctioned-by-extension entities—more complicated, yet crucial.

"In the UK, the way that the EU Blocking legislation is implemented, if you get that reporting obligation wrong, you’re committing a criminal offence," Bradshaw says. "The stakes are high, and it remains to be seen exactly how EU businesses are going to cope with the additional pressure on them from a sanctions perspective."

 

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Francisco Fisher, Content Developer

Francisco is a content developer for Bureau van Dijk. He has spent more than a decade working as a writer, editor and content marketing specialist for tech-focused companies and publications.

Francisco is a content developer for Bureau van Dijk. He has spent more than a decade working as a writer, editor and content marketing specialist for tech-focused companies and publications.

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