Do you need to worry about being included in the US sanctions list?

There are situations when you need to worry about how to stay out of the US sanctions. For example, when one of the former shareholders of your company is on the sanctions list, or one of the companies you have business with may directly or indirectly be under sanctions. The structure of ownership of the business, as well as business transactions, are under scrutiny because of the US sanctions.

Moreover, both direct and indirect deliveries of goods and services are also monitored, i.e., through intermediaries or chains of intermediaries. In addition to that, some professional services, namely corporate, trust, accounting, and business management services cannot be rendered to persons and companies that are located on the territory of the Russian Federation. And this is just an example. The spectrum of what falls under US sanctions against Russia is much wider, and keeping track of what is allowed and what is not is a complex and multi-level process.

Reducing the risk of falling into the US sanctions list

An action plan to mitigate the risks of being placed on the US sanctions list should be based on an assessment of your specific situation, your future plans, and your expectations from implementing the plan. If your situation has developed in such a way that one of the shareholders of your company is directly or indirectly under sanctions, you urgently need to restructure the company. The sanctioned shareholder should sell his share in the company or at least drastically reduce it.

You will have to take additional measures if your plans include export-import transactions, transfers of funds in US Dollars or Euros, opening or maintaining bank or brokerage accounts abroad, etc. Namely, the measures should allow you to distance yourself from the sanctions-related toxic image. On top of that, you would need to demonstrate your transparency and compliance with all sanctions restrictions and requirements.

However, even after the restructuring and withdrawal of persons under sanctions from shareholders, the company may have problems. After the restructuring, a toxic trail may follow the company for a long time. We are ready to analyze the existing and potential threats to your business in connection with US sanctions. Upon the client’s request, we will develop a plan of action aimed at fixing existing problems and avoiding US sanctions in the future. Thus, you can continue doing business in a complex sanctions environment.

Compliance with the US sanctions

Even after you have put things in order in the shareholder structure of your business, checked its environment and partners for possible sanctions consequences, and adjusted your plans and expectations, you still have a lot of work to do. Namely, this is work related to establishing permanent procedures for verifying compliance with the requirements of the US sanctions regime. Yes, this will considerably complicate conducting KYC. You will have to collect and analyze much more data about your potential partners and clients. However, the cost of error is too high. Depending on what kind of business you have, its international and domestic connections, contractual relationships, and bank and brokerage accounts, you will have to establish a reliable system of compliance to stay out of the US sanctions list.

Establishing contact with OFAC to avoid being sanctioned

In some cases, when getting on the US sanctions list is only a matter of time, it is worth contacting the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury (US Treasury) and explaining why you don’t deserve to be on the OFAC SDN list. However, contacting the body that imposes sanctions and monitors their implementation makes sense only if you have an experienced American lawyer by your side. Negotiating with OFAC is a delicate and complicated process. It should be handled by professionals.

In our opinion, it is worth pro-actively contacting OFAC if (1) you feel that you or your company are likely to become subject to US sanctions; (2) you have compelling evidence that putting you or your company on the US sanctions list would be a mistake; and (3) you are willing to negotiate with OFAC and make concessions to avoid US sanctions. We are ready to represent you in OFAC and other US government agencies.