sanctions text crossword red letters 76255 47 - Sanctions in Banking and Finance

Sanctions: What It Really Means

The term sanctions have been heard by many across the globe especially in news these days, yet what does it really mean and how are they imposed? As defined in Oxford Bibliographies, Sanctions are “deliberate, government-inspired withdrawal or threat of withdrawal of customary trade or financial relations.” Economically related sanctions include different forms of financial transaction restrictions, tariffs, and trade barriers.

The imposition of economic sanctions has various political, diplomatic, and even national security implications. In accordance with Article 41 of the United Nations Charter, sanctions measures include a broad range of enforcement options that do not involve the use of armed force. In theory, sanctions are intended and imposed in order to settle peace globally; however, in practice, it is mixed with the political issues of some countries that may have with each other!

Under the sanctions of the Security Council, there are comprehensive economic and trade sanctions that include more targeted measures such as arms embargoes, travel bans, and financial or commodity restrictions. On the one hand, EU sanctions normally restrict economic relations between the European Union and the targeted country that is undergoing those specific sanctions. On the other hand, the stated sanctions may entail asset freezes and visa bans for certain individuals.

Sanctions

For getting to know more about sanctions effect on economy, read:
FATF Black & Grey: Best Way of Investment Measurement.

Different Processes of Imposing Sanctions

Basically, there are different processes of the imposition of the sanctions today from the U.N., U.S., and E.U.

The Security Council’s global threat response mechanism is to cut economic ties with both state and non-state groups.

The European Union imposes sanctions (known more commonly in the twenty-eight-member bloc as restrictive measures) as a major part of its Common Foreign and Security Policy (CFSP).

More than two dozen existing U.S sanctions programs are administered by the Treasury Department’s Office of Foreign Assets Control (OFAC).

Another classification of sanctions is based on the number of parties imposing sanctions. This includes unilateral and multilateral sanctions.  It is obvious that unilateral sanctions seem to be riskier, as only one country is on the line for the sanction’s results.

Import sanctions usually take on a quick effect which is the inability to export goods abroad or have a foreign nation purchase them. This could be a crucial matter if the sanctioned country’s economy depends on that exported good.

hire lawyer ad img - Sanctions in Banking and Finance
Get quotes from lawyers
Find the right lawyer for your legal needs. Submit your request and get multiple competitive offers from our qualified lawyers.

Financial Sanctions and Banking

This classification of sanctions are intended to punish misconduct by a supervised bank. They serve as a deterrent to the bank concerned and also to the whole banking body of a country. Imposing sanctions can be initiated not only during on-going breaches but also after the breach has ceased, as long as the limitation period is respected.

You should note that every organization which impose sanctions, may have its own regulations;

For example in the European Union, in the event of breaches of regulations implementing EU directives, breaches committed by natural persons or when a non-pecuniary penalty has to be imposed, the ECB may request the relevant national supervisory authority which is called NCA to open the appropriate proceedings. The NCA conducts these proceedings and decides on the resulting penalties.

Other Sanction Classifications

Moreover, there are other classifications of sanctions. Secondary sanctions focus on third parties stopping their activities with the sanctioned country by threatening to cut off the third party’s access to that sanctioned country. This is present in the recent U.S sanctions against Iran. It is still unclear for compliance and regulatory lawyers whether providing legal services to Iranian entities can be sanctionable under the newly issued Executive order (Jan 10, 2020) or not. Upon much research, it is believed that secondary sanctions are the worst out of all the economic sanctions, which include the burden of economic hardship and restrictions upon the nation’s citizens and industries.

It is worth mentioning that when establishing a business in a jurisdiction, compliance with applicable national and international law in regards to sanctions is a really important stage that should be closely taken into consideration. If a sanctioned nation decides to be non-compliant or attempt to circumvent the sanctions, a financial penalty will be issued and might be regarded as a criminal act. As we continue to examine sanctions, it is also necessary to perform case studies on targeted countries and the sanctions that have been imposed upon them.

You May Also Like

tax tips UK and Poland
Top 4 Remarkable Tax Tips UK and Poland
Sanction
Sanction Limitation & Exclusion Clause Countries 2022
Patent Claims
Patent Claims: Necessary Remarkable Steps in Order to Draft a Patent
word sanctions empty iron shopping basket supermarket white background is isolated - Iran and Libya Sanctions in Business and Commercial Law
ILSA 1996 (Iran and Libya Sanctions), ISA 2006 and D’amato Act