The obligations imposed by the European Union’s (EU) restrictive measures (sanctions) are binding for EU nationals or persons located in or doing business in the EU. Fines may be imposed by EU Member States for non-compliance or breaches.
The sanctions encompass making funds or economic resources available, directly or indirectly, to sanctioned persons and participating, knowingly and intentionally, in activities whose object or effect is, directly or indirectly, to circumvent the relevant prohibitions
Screening against publicly available sanctions lists
Companies involved in international trade are often familiar with economic sanctions, for example restrictions on the import, export, re-export, transit, etc. of dual-use goods, military equipment, services, and technology. However, it is useful to bear in mind that international sanctions may also apply to the parties to the transaction, such as natural or legal persons and their beneficial owners.
Companies should therefore regularly screen their customers and partners and their beneficial owners against the latest version of the consolidated list of individuals, groups and entities subject to EU financial sanctions and be aware that sanctions may also apply to non-listed persons that are owned or controlled by, or act for the benefit of, or at the direction of sanctioned persons.
Although United States (US) sanctions are not legally binding on all non-US persons, their impact is extraterritorial, global, and multifaceted. Thus, we also recommend screening customers, partners, and their beneficial owners against the US Office of Foreign Assets Control (OFAC) sanctions list.
We can support you in preparing the documents for financial transactions.Inga Karulaitytė, Head of FinTech Group, Attorney at Law, Partner, ECOVIS ProventusLaw, Vilnius, Lithuania
Advice on financial transactions
The sanctions on Russia and Belarus mean that certain financial transactions are subject to enhanced scrutiny by financial institutions. This may result in transactions taking longer to be processed. Thus, in addition to the above-mentioned screening, the advisers from ECOVIS ProventusLaw also recommend the following:
- Companies should be prepared to provide financial institutions with additional documentation (including information on the beneficial owners of the partner and/or customer) to validate their financial operations.
- Payments should include complete and accurate information in the payment instructions. For example, payments against an invoice should include not only the invoice number but also the ultimate user and the type of goods, destination, and other relevant information.
- Sanctions risks should be assessed not only in relation to the supply of goods or services but also in relation to counterparties and the flow of funds to avoid invertedly becoming part of sanctions evasion. This should be done before entering into any business relationship.
For further information please contact:
Inga Karulaitytė, Head of FinTech Group, Attorney at Law, Partner, ECOVIS ProventusLaw, Vilnius, Lithuania
Email: inga.karulaityte@ecovisproventuslaw.com