Current Awareness: Export and Financial Sanctions
In an ever increasing global market place, it has become far more common for UK based companies to receive enquiries not only from the European market, but also from all over the world. It is possible that customers will have no existing relationship with a supplier particularly if enquiries arise by way of a request via the internet or email. This can pose many difficulties for suppliers not least bringing into play potential export and financial sanctions.
What are Sanctions?
The UK has its own set of export regulations and financial sanctions relating to trade with foreign countries. Such regulations can be wide reaching and diverse and may relate to individual countries, and / or individuals. There is also a European regime, which, at least for the moment, the UK is still subject to. Whilst the UK and EU regimes generally overlap, in some cases the UK’s restrictions may go further. Whilst the existence of export prohibitions to certain countries would appear to be a matter of common sense (e.g. North Korea) some of the prohibitions (e.g. to certain African countries) may come as more of a surprise and so it is important to develop robust procedures to avoid mistakes being made.
Aside from this, there are also financial sanctions that can “bite” if trade is carried out in a foreign currency. For example, there is an argument that trade in US dollars can trigger the US export and financial sanctions even if trade is not directly or indirectly with or involving the US. Companies should be aware of these sanctions when trading with foreign entities.
As the UK and Europe’s relationship develops with foreign countries so too will the application of sanctions. The regimes relating to export and financial sanctions are ever changing and can be very difficult to keep track of. Sanctions also apply to individuals on a ‘blacklist’ which is regularly updated. These developments must be monitored to ensure compliance.
With the UK’s pending exit from the European Union, it is likely that the landscape will change again. A detailed analysis will be necessary to review the export and financial sanctions regime in place post-Brexit.
What are the consequences?
This is a complex and far reaching area of law and one which can result in surprising potential liabilities for a company. Not only can companies be liable for monetary fines, but also directors may be criminally liable for breach of sanctions in certain circumstances. A serious breach can result in imprisonment for directors.
It is important that companies and their directors are aware of the relevant sanctions, both in terms of export and financial sanctions and should be prepared for the risks that arise should they receive orders from certain foreign entities. Potentially, a company could commit a criminal offence by reason of a decision made by the sales team and processed by the warehouse, so it is critical that companies trading with entities outside the UK have the relevant procedures in place to ensure that sanctions are monitored appropriately and that the company does not inadvertently trade in breach of such sanctions. A lack of intent and ignorance of the position would not be a defence to a strict liability offence.
Points to consider
It is important to put procedures in place to ensure that your company adheres to the relevant sanctions and regulations. Consider carrying out a review of company procedures to ensure adherence to the regulations and, if necessary, amend current policies to ensure future compliance.
This article was written by Stephen Burns and Ben Moore. For more information please contact Stephen on +44 (0)1483 252618 or firstname.lastname@example.org or Ben on +44 (0)1242 246352 or email@example.com
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