Trade sanctions are still operating during the pandemic. The United States and other countries impose comprehensive economic and trade embargoes or more targeted sanctions on countries considered “bad actors” by the United Nations or individual countries. Small businesses and not-for-profit organizations that operate internationally are particularly susceptible to the devastating consequences of violating these sanctions. This repost of our 2012 blog explains.
Any small business worth its salt aspires to become 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. ING Bank is one such success story.
Starting life in 1991 as a small local Dutch bank, by 2012 through mergers and acquisition ING had grown into a multinational banking presence, with a net profit of almost 4 million euros. 2012 was also the year that the bank was required to pay US$ 619 million in fines for violating US trade sanctions.
ING was accused of having helped to facilitate the movement of money by Cuban and Iranian companies, violating the US embargoes against these two countries. The US$619 million fine represented the penalty and interest on over 20,000 individual transactions from the early 1990s – in other words since the company’s inception.
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. As the company grew, knowingly or unknowingly, it repeatedly violated US trade sanctions. Fortunately for ING, by the time it was penalized it had the resources to withstand what could have been a crushing payment. A smaller company could have been put out of business.
Trade sanctions are still operating during the pandemic. The United States has an extremely restrictive sanctions regime that extends beyond those required by the United Nations. 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. There are also prohibitions against doing business with Specially Designated Nationals which include companies with such harmless-sounding names as “A.T.E. International Ltd” of the United Kingdom, and Alimentos Continental of Honduras.
Sanctions have grown even more restrictive under the Trump Administration. And with a few exceptions for humanitarian assistance, trade sanctions are still operating during the pandemic.
Contact us to learn more and to discuss how you can develop a cost-effective approach to complying with the legal requirements of doing business internationally.