With new sanctions regimes comes increased scrutiny. In a recent article for Risk & Compliance magazine, FTI Consulting’s Irina Petrila discusses how companies can implement Office of Foreign Assets Control (OFAC) requirements.
R&C: Could you provide an overview of key trends shaping the global sanctions landscape in recent months? What impact has the COVID-19 pandemic brought to bear on global trade?
Petrila: The coronavirus (COVID-19) pandemic has brought a significant impact on international trade, with the World Bank predicting a 5.2 per cent contraction in global GDP in 2020. Maintaining trade flows requires cooperation and trust between parties, which have been hampered by the fear of international trade fuelling transmission of the virus and export restrictions on essential goods. There had already been tensions in trade prior to the pandemic, from tariff increases among major players to significant government support in key sectors, which has meant that any further sanctions-related restrictions will continue the significant pressure on global commerce. While 2020 began with the US imposing new economic sanctions against Iran’s construction industry, new sanctions were limited as governments focused on the pandemic in the first half of the year. Nevertheless, the second half of the year brought a rise in new and more complex restrictions imposed by the US, the European Union (EU), as well as the UK, making it challenging for firms to comply with global sanctions and keep abreast of the latest developments. With the US continuing to maintain restrictions on countries such as Iran, Russia, Syria and Venezuela, and introducing new sanctions on Hong Kong and China, the EU is finding itself in a difficult position when having to agree and adopt the same sanctions regimes, especially where the US continues to make extensive use of secondary sanctions, obliging non-US persons to stop conducting business with countries under US sanctions. As such, the EU will be looking to increase its autonomy from the US by adopting its own restrictive measures and ensuring that the euro currency plays a more significant role in global trade. In the meantime, firms will have to consider complying with multiple sets of restrictive measures.
This article has been reprinted with kind permission from Risk & Compliance magazine.