Small businesses doing business internationally need to understand their legal obligations so that they don’t become another ING, the bank recently levied with 619 million USD in fines. The fines penalize ING for its failure to abide by US trade laws. ING to pay $619 m to settle sanctions case.
Any small business worth its salt has aspirations of becoming successful. Success may be equated with achieving a certain amount of profitability or the ability to stay afloat. It may also mean growth, from a company generating thousands of dollars to one valued in millions or billions; from a regional or national entity to one with a multinational presence.
This is what happened to ING, which started life in 1991 as a small local Dutch bank. Through additional acquisitions, today ING is a multinational banking presence employing just under 95,000 employees worldwide. ING’s 2011 net profit was 3,675 million euros.
As the company grew, however, whether knowingly or unknowingly it repeatedly violated US trade sanctions. US trade sanctions prohibit or place restrictions on individuals and companies operating under U.S. law from doing business with embargoed countries. The countries may be embargoed because of U.S. concerns about human rights violations, terrorist or nuclear proliferation activities, or U.S. Government dislike of the government’s policies.
In mid-June it was announced that ING is to pay a penalty of US$ 619 million to settle allegations that it had violated U.S. trade sanctions against Cuba and Iran since the 1990s. The fine represents the penalty and interest on over 20,000 individual transactions from the early 1990s – in other words since the company’s inception. The allegations against ING are that it helped facilitate the movement of billions of dollars by Cuban and Iranian companies in violation of the US embargoes against these two countries.
There are also sanctions against doing business with individuals or companies on the Specially Designated Nationals (SDN) List which contains such harmless sounding names as “A.T.E. International Ltd” of the United Kingdom, and “Shipley Shipping Corporation” of Panama. They could be innocent of any wrongdoing. However, taking money from them or shipping them an order is prohibited so long as they are on the SDN List.
The unlicensed export of specified products or services is also banned. Fines for violation of any of these rules can range from $50,000 to $10,000,000 for each violation. A trader who is found to have willfully violated the rules may incur increased penalties, loss of exporting privileges, and/or imprisonment.
There is no statute of limitations on these violations. So ING was charged with violations dating back to or shortly after its inception as a small, local bank. This is why the time to begin paying attention to the legal do’s and don’ts of doing business internationally is NOW!
Contact me to discuss how you can develop a cost-effective approach to complying with the legal requirements of doing business internationally.