Criminal investigators appear at your company out of the blue, demand to see your business communications and confiscate your computers. You are suspected of maintaining business relations with terror suspects.
Does that sound like a scene from an action movie to you? It’s closer to reality than you think.
Since the attacks of 11 September 2001, the European Community has adopted the counter-terrorism regulations (EC) no 881/2002 and no 2580/2001. Their aim is to deprive terrorism of its financial and economic resources and thus to fight it consistently. Against this background, the US authorities and the EU, among others, publish so-called sanctions lists with an overview of sanctioned persons, organisations and companies.
Do you think your company is not affected because you do not export abroad?
This is a fatal mistake, because all companies are obliged to carry out complex auditing measures. Business addresses must be checked against existing sanctions lists. This means ensuring that business contacts are not on a sanctions or anti-terror list.
Companies of all sizes and legal forms are required to cross-check each business contact against individuals, organisations and entities on the sanctions lists. Not only customers have to be checked, but also suppliers and employees. For this reason, different departments of a company are responsible for the screening. This means that not only the export department, but also other departments in companies should participate in the audit:
Every company, regardless of the country in which its headquarters are located, is legally obliged to check the business partner against the published national and international sanctions lists before any business contact. This regulation applies not only to exports, but also to imports and all domestic transactions.
Anyone who fails to comply with this obligation or violates the regulation commits a criminal offence or an administrative offence. Depending on the extent of the offence, this may be punished by imprisonment or a fine. Even negligent behaviour can quickly become a downfall, resulting in high fines. The management is personally liable.
- Fines of up to 500,000 euros
- Prison sentences between three months and six years
- Immediate freezing of all company accounts as well as company assets
- Business closure
- Damage to image and reputation
- Withdrawal of the AEO certificate as authorised economic operator
Anyone who ends up on a sanctions list, either as a company or as a private individual, has to contend with serious consequences. Well-known companies have already been affected, but private individuals are not immune either. Here are some examples:
The US authorities threatened Commerzbank with criminal proceedings for alleged violations of sanctions imposed by the United States against Iran. To avert this, the major bank paid a fine of 1.3 billion euros and laid off 4 employees. Among them was Lars Christiansen, who was alleged to have violated U.S. law by doing business with an Iranian shipping company.
In September 2017, an automated audit could have saved luxury jeweller Cartier from a USD 344,800 fine. It appears that in 2010 and 2011, Cartier exported four shipments of jewellery to Shuen Wai Holding Ltd, which has been on the “Specially Designated Nationals and Blocked Persons List” (SDN List) of the U.S. Office of Foreign Assets Control (OFAC) since 2008.
In May 2019, Chinese electronics manufacturer Huawei was placed on the so-called Entity List, which is a blacklist, citing security concerns. Companies based in the US have since been banned from doing business with the network equipment and smartphone maker without permission. Huawei expects sales to drop by 30 billion USD in 2019 and 2020 due to U.S. sanctions.
Checking sanctions lists is an elementary task, not only in export controls. In practice, however, the following questions often arise: “How could we implement these guidelines?” and “Does it make sense to purchase software?”
All sanctions lists can be accessed online and are accessible to everyone. Checks can be carried out by any company free of charge. However, due to the large number of sanctions lists worldwide and their permanent updating, a legally compliant comparison on a manual basis is hardly possible. In addition, there is the obligation to document that an audit has actually been carried out.
With ecovium GmbH you have a competent partner at your side with many years of experience. The software solution S-CHECK® is approved by customs and has been accepted in customs audits of various customers. S-CHECK® automates the sanctions list screening, checking your address data at regular intervals and providing you with an up-to-date report. With S-CHECK® you benefit from a compliance solution that protects you and your company from legal and financial risks. The software solution not only makes work much easier, but also ensures maximum compliance.
names on sanctions list
names on PEP lists