Sanctions – part 2
HOW DO I KNOW IF I AM ENGAGED OR ENGAGING WITH A SANCTIONED CLIENT?
Financial sanctions can apply to anyone and any business. First and foremost, businesses should consult the relevant UAE sanctions lists as outlined above. Having confirmed the client is not on any of these lists, you should then check the international sanctions lists that are relevant to you (see below). Different countries operate different regimes so there is no global consolidated list which businesses can definitively refer to in order to ensure they are not inadvertently breaching sanctions rules. This highlights the importance of stringent and robust ‘Know Your Customer’ (KYC) and anti-money laundering (AML) checks. In conjunction with various software solutions which can check individual databases, firms should always undertake manual checks on relevant databases.
HOW DO I KNOW WHICH INTERNATIONAL SANCTIONS REGIMES ARE RELEVANT TO MY BUSINESS?
If your business is registered overseas or operates as a subsidiary of a company registered in a non-UAE jurisdiction, you should check the rules which apply in that jurisdiction as you may be required to comply with them even if your subsidiary does not operate in that jurisdiction.
Second, if your business employs foreign nationals, or a company director or shareholder is a foreign national from outside the UAE, you should check the relevant sanctions lists and regulations of those countries as some jurisdictions may impose duties on their nationals to comply with their sanction regulations outside the territory of that country.
For example, UK citizens based overseas and UK-registered companies operating overseas are prohibited from dealing with the funds of any individual or company who is subject to an asset freezing order by the UK government and may face civil and criminal prosecution upon their return to the UK if they fail to comply.
WHAT DO I NEED TO DO TO COMPLY WITH INTERNATIONAL SANCTION REGULATIONS?
Different jurisdictions will have different standards. Most sanction regimes will prohibit dealing with the financial assets of a sanctioned individual, including but not limited to: making funds available for the sanctioned party, undertaking any actions which might cause a material change to the value, quantity, or nature of the funds, and it may be prohibited under some regimes to ‘deal’ (deliberately ambiguous) in any way with a sanctioned party. As such, it is critical that you seek legal advice or thoroughly and specifically check every applicable international sanction regime that you may be subject to.
WHAT ARE THE PENALTIES THAT CAN APPLY IF I FAIL TO COMPLY WITH INTERNATIONAL SANCTIONS?
Again, these can vary between different jurisdictions but range from civil claims to criminal prosecution. The penalties may apply to any employee, manager, or director of a company which breaches sanction rules. It may also be possible that you or your company may yourself become subject to international sanctions as a penalty for breaching them, which in many cases is effectively irreversible and can have catastrophic business consequences. Consult the relevant guidance from applicable jurisdictions to find out more about specific penalties which businesses and individuals may be subject to.
In the UAE, the penalties for violations of local sanction regulations are particularly severe and punishable by criminal prosecution with the possibility of maximum fines of AED 100,000,000, prison sentences, and in some cases capital punishment.