We hear of Russian cyber attacks in the U.S. and Europe weekly, if not daily. Could the attacks be retaliation for American and European sanctions against Russia?
In 2014, the European Union and the United States imposed sanctions against Russia because of its ongoing actions in Ukraine. Sanctions affect international trade because they prohibit or place restrictions on individuals and companies from doing business with sanctioned or countries. The countries may be embargoed because of concerns about human rights violations, terrorist or nuclear proliferation activities, or antipathy towards the government’s policies.
The US and EU sanctions against Russia, for example, include reduced access to financial services, a complete ban on services related to oil exploration and production, and inclusion of Russian individuals on the lists of persons subject to travel bans and to having their assets frozen if held in US and/or European banks.
As a practical matter, caution should be used when doing business with persons and companies on these lists. The United States maintains a list of specially designated nationals with whom US nationals (individuals and companies operating within the U.S.) are prohibited from doing business unless they have obtained a license to do so. The EU maintains its own list of individuals subject to EU financial sanctions.
Other Sanctions Programs
The U.S. has sanctions in place on a number of other countries. These include broad sanctions against doing business with Cuba, Iran, North Korea, and Syria. The EU sanctions are less comprehensive and maintained against fewer countries. Both countries maintain subject matter sanctions, such as prohibitions against trading in “conflict” or “blood” diamonds used to finance the operations of rebel movements in a number of African countries.
Why Traders Need to Pay Attention
The underlying foreign policy goals to these sanctions programs mean that they are strictly enforced. Penalties for violation(s) can include individual and/or corporate fines in the tens of thousands of dollars/euros for each violation, denial of export privileges, and/or even imprisonment. Furthermore, just being investigated for an alleged violation can result in the loss of company reputation and clients.
These programs change in response to foreign policy concerns. Before 2014 there were no sanctions against Russia.
There is no statute of limitations on these violations. In a previous blog we reported how the ING Bank in 2012 paid US 619 million in connection with violations dating back to its inception as a small, local bank in 1991.
This is why the time to begin paying attention to the legal do’s and don’ts of doing business internationally is NOW!
Contact us for help with developing a cost-effective compliance policy to protect your company.