Smarter News Now
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting
No Result
View All Result
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
No Result
View All Result
Smarter News Now
No Result
View All Result
Home Investing News

Let’s talk about sanctions

by
August 3, 2022
in Investing News
0
Let’s talk about sanctions
0
SHARES
9
VIEWS
Share on FacebookShare on Twitter

In February, Russia invaded Ukraine, bringing down upon Moscow a regime of sanctions mostly from Western countries. What does it mean when sanctions are imposed on an individual, class of persons, entity or country?

The Association of Certified Anti-Money Laundering Specialists (ACAMS) defines sanctions as “punitive or restrictive actions taken by individual countries, regimes, or coalitions with the primary purpose of provoking a change in behavior or policy. Sanctions can restrict trade, financial transactions, diplomatic relations, and movement. They can be specific or general in their implementation and enforcement. Sanctions are also referred to as restrictive measures.”

Sanctions can be imposed by one country (unilateral) or by multiple countries (multilateral) on an individual, class of persons, entity, or country to influence their actions.

For instance, under the United Nations Charter, the Security Council can take action to maintain or restore international peace and security under Chapter VII of the charter. The Security Council is composed of 15 Members. The five permanent members are China, France, the Russian Federation, the UK, and the US. The 10 non-permanent members are elected for two-year terms by the General Assembly. Sanctions that have been approved are binding on all member states.

The European Union (EU) implements all sanctions adopted by the UN Security Council. In addition, the EU may also decide to impose sanctions on its own initiative (‘EU autonomous sanctions’). EU sanctions apply within the jurisdiction of the EU, to EU nationals in any location and to companies and organizations incorporated under the law of a member state. Enforcement must be undertaken by the member states.

Moreover, the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the US. OFAC publishes lists of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific.

The Export Control Organization (ECO) of the UK licenses controlled goods and goods caught by a country-specific embargo, while Her Majesty’s Treasury licenses funds or assets.

Taking the war in Ukraine as an example, the US and the UK have both imposed additional sanctions on Russia, which include: banning new inbound investment, as well as severe sanctions on two Russian financial institutions (Alfa Bank and Sberbank), on major state-owned enterprises, and on government officials and their family members.

As part of the UK’s efforts to isolate Vladimir Putin, it announced sanctions against seven oligarchs. Roman Abramovich, the owner of Chelsea Football Club, had his assets frozen, and was prohibited from transacting with UK individuals and businesses, and barred from travel. Abramovich’s one-time business partner, industrialist Oleg Deripaska, was also similarly sanctioned.

Another notable example is the long-time sanctions regime imposed on North Korea due to the country’s continuing pursuit of its nuclear and missile program. Executive Order 13722 blocks the Government of North Korea and the Workers’ Party of Korea; prohibits the export and re-export of goods, services (including financial services), as well as technology from the US, or by a US person to North Korea; and prohibits new investment in North Korea by a US person.

Sanctions can further be classified into four types: diplomatic, financial, trade and travel. A diplomatic sanction restricts or suspends membership in international organizations and diplomatic visits that affect the ability of the target to interact with other countries. It can also limit access to financial aid or loans. Financial sanctions can involve account seizures or freezing. Trade sanctions, sometimes called embargoes, limit the import/export of specific goods (e.g., arms, oil or diamonds) or services (e.g., technology, training, financing). Travel sanctions restrict the mobility of individuals on the list (preventing them from traveling to and through certain countries). It can extend to any asset including bank accounts to pay for travel.

As payment transactions are predominantly the only record that can detect a potential sanctions violations, a financial institution’s role is crucial in discerning the circumstances that warrant sanctions. Financial institutions also have the right to seize or freeze assets to prevent payments to certain individuals.

Thus, a financial institution must have a robust Anti-Money Laundering (AML) compliance program in place which should be based on the following pillars to combat financial crime: internal policies, procedures and controls; designation of an AML officer; employee training; independent testing; and customer due diligence (CDD). As part of CDD, financial institutions must identify and verify the identity of the customer as well as the parties that own or control them, their transactions and the applicable sanctions. The customer’s and parties’ name would need to be screened against the sanctions list. These are done through intelligence gathering, checking of transactions with violations, and filing of suspicious activity reports. A good AML compliance program will help financial institutions determine any involvement that a customer has with a sanctioned target or if the customer itself is a sanctioned individual or entity. Lastly, there should be a check done on the customer’s transactions to make sure that they are not dealing with sanctioned individuals or entities. When done properly, it should help prevent financial institutions from violating sanctions.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Joanne Reyes is a manager at the Financial Crime practice of PricewaterhouseCoopers Consulting Services Philippines Co. Ltd., a Philippine member firm of the PwC network.

+63 (2) 8845-2728

joanne.reyes@pwc.com

ShareTweetPin

Related Posts

Stocks decline on profit taking, recession fears
Investing News

Stocks decline on profit taking, recession fears

August 23, 2022
Peso climbs vs dollar as RTB offer starts
Investing News

Peso climbs vs dollar as RTB offer starts

August 23, 2022
PNR cancels bids for 3 projects after finding them ‘non-feasible’
Investing News

PNR cancels bids for 3 projects after finding them ‘non-feasible’

August 23, 2022
Senate grills Rodriguez on approval procedures for sugar import order
Investing News

Senate grills Rodriguez on approval procedures for sugar import order

August 23, 2022
Trade dep’t expecting sugar price monitoring report by Friday
Investing News

Trade dep’t expecting sugar price monitoring report by Friday

August 23, 2022
Fisherfolk seek halt to reclamation on municipal fisheries
Investing News

Fisherfolk seek halt to reclamation on municipal fisheries

August 23, 2022
Next Post
Ex-PEZA head claims investors confused by OIC arrangement

Ex-PEZA head claims investors confused by OIC arrangement

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Email Address *
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!
 

Recommended

PCCI backs agrarian reform amendments allowing bigger farms

PCCI backs agrarian reform amendments allowing bigger farms

June 15, 2022
Majority of UK office workers want four-day week and hybrid work

Majority of UK office workers want four-day week and hybrid work

July 27, 2022
Pilipinas Shell posts P7.8-B income

Pilipinas Shell posts P7.8-B income

August 10, 2022
Conrad honors Champions of Sustainability

Conrad honors Champions of Sustainability

August 17, 2022
Trade department upholds authority of PEZA OIC

Trade department upholds authority of PEZA OIC

August 4, 2022

Logistics sector provides job boost to level up the regions

June 6, 2022
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting

Copyright © 2022 SmarterNewsNow.
All Rights Reserved.

Disclaimer: SmarterNewsNow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

No Result
View All Result
  • About Us
  • Contact Us
  • Email Whitelisting
  • Home
  • Privacy Policy
  • Terms & Conditions
  • Thank You

Copyright © 2020 SmarterNewsNow. All Rights Reserved.