The recent Russian referendums to annex the Donetsk, Zaporizhzhya, Kherson, and Luhansk regions of Ukraine on September 30, 2022, have catalyzed a new round of Russia sanctions.
The world responded to the annexations with new sanctions targeting Russian-linked organizations, oligarchs, and Russian nationals. Early into the conflict, Russia was the most sanctioned country in the world, (see also our article at the time) and the new sanctions were a continuation of earlier measures aimed at limiting Russia’s financial means to fund the war.
Organizations worldwide must now navigate a complicated web of sanctions to mitigate the risk of fines and other penalties. As a result, it’s become more vital than ever before for organizations to have a comprehensive denied party screening program to identify any sanctioned entities throughout their supply chain.
Many businesses have been attempting to manually screen suppliers and partners against sanctions but quickly discover it absorbs a significant amount of time and resources, and that it is prone to human error. In addition, restricted party screening is not done once but should be carried out frequently in order to keep pace with the release of new rules and regulations.
Keep reading to discover more about the latest round of sanctions and how your organization can screen suppliers and partiers to remain compliant.
World Governments Announce New Russia Sanctions
As mentioned earlier, the new round of Russia sanctions was aimed at further restricting Moscow’s ability to fund its war in Ukraine.
Notable new U.S. Russia sanctions include the following:
- New visa restrictions on 910 individuals with Russian or Belarusian military ties.
- 57 entities in Russia and the Crimea region of Ukraine were added to the Department of Commerce restricted entity list, increasing the total count to 392.
- Designating 109 State Duma members, 169 government officials, and other parties with ties to the Russian government or sanctioned institutions, enforced by The Department of Treasury’s Office of Foreign Assets Control (OFAC).
- OFAC Russia sanctions also include international suppliers who have supported Russia’s defense sector
The European Union recently announced a new package of Russia sanctions:
- Import bans worth €7 billion (about US$6.8 billion) and export restrictions
- A new policy that allows the EU to sanction anyone facilitating the circumvention of sanctions
- Bans EU citizens from working at any Russian state-owned enterprises
92 new sanctions were announced by the United Kingdom, which include:
- 55 state-linked organizations’ board members
- 33 Russian officials with ties to the annexation referendum
- Four Russian oligarchs with a £6.3 billion (about US$7 billion) combined net worth
- The UK has, so far, sanctioned over 1,200 individuals, 120 entities, and over 120 oligarchs.
World governments have strongly signaled that they will continue to launch new sanctions unless there is an end to the Russia-Ukraine conflict. As a result, it’s become imperative for businesses worldwide to create efficient compliance processes to prevent working with sanctioned entities.
How to Achieve Compliance with Global Sanctions
Sanctions are announced and enforced to limit Russia’s ability to finance the war, but the side effect creates a complex task for businesses striving to stay on the right side of the law
What can your organization do to ensure compliance with current and future sanctions? New OFAC Russia sanctions by themselves have significantly increased the number of known denied parties — it’s vital to have fully-featured software solutions to stay compliant.
Automated and Frequent Denied Party Screening is Required
It’s vital to continually screen partners and your entire supply chain to help make sure organizations comply.
It’s possible to screen restricted parties manually, but it will be error-prone and time-consuming. Russia currently has over 7,000 sanctions against various individuals and parties; it’s simply unrealistic for most organizations to handle denied party screening manually.
Restricted party screening is also not a task you can do once and then consider completed — it must be done continuously. Ongoing screenings assure that your business is always aware of denied parties, allowing you to take corrective action.
Descartes Visual Compliance’s solution allows automated denied parties screening to keep you compliant with global sanctions. Our platform autonomously scans your partner and suppliers against our global sanctions database to discover any entities named in EU bans, OFAC Russia sanctions, or other government restrictions.
OFAC’s 50 Percent Rule Makes Russia Sanctions Compliance More Complex
OFAC Russian sanctions include the 50 Percent Rule targeting any organization with 50% or more ownership by sanctioned entities. The rule is not straightforward to comply with because there are no official lists to screen against.
For example, you may work with a manufacturer not sanctioned by any government, but you later discover the company has four sanctioned shareholders with a combined 61% ownership stake. According to OFAC’s rule, the manufacturer is considered sanctioned.
Discovering every shareholder and cross-referencing sanctioned entity lists is time intensive and largely unrealistic. Fortunately, automated solutions can significantly simplify the task.
Identify Sanctioned Entities with Visual Compliance
The list of sanctioned entities continues to grow as the Russia-Ukraine conflict continues. In addition, world governments aim to restrict Russia’s financial resources, creating new hurdles for organizations striving to comply with every sanction.
Automated restricted party screening is a powerful tool to help identify sanctioned parties throughout your supply chain and partnerships. Screening is applied consistently and uniformly, reducing the chances of denied parties slipping through the cracks.
Descartes Visual Compliance is a world leader in international compliance solutions, and our platform helps organizations find sanctioned entities, reducing the risk of fines and other penalties.
Are you ready to remain compliant with all global sanctions? Contact us today to speak with a compliance expert to learn how Visual Compliance can help.