Don't play fast and loose with sanctions – advice to intermediaries from ITIC

International Transport Intermediaries Club (ITIC) warns all intermediaries such as brokers, agents and consultants to be fully aware of the parties they are working with to ensure all relevant sanctions are complied with. This is particularly important since the outbreak of war in Ukraine and the speed at which many regimes have imposed sanctions.

 

Initially, ITIC advises considering the following issues:

·Where am I physically based?

·Where is my company registered?

·Do we have offices in other countries that might affect this office?

·Do we employ non-local staff members that might be subject to different sanction regimes? (US sanctions, for example, can apply to all US citizens even if they are working outside the USA).

Once complete, the next step is to check whether the principal – or any other party connected with the transaction – is listed in any sanction regime that affects the intermediary's company or employees. This can be achieved by employing an external agent to perform the checks, or by accessing the sanctions lists from relevant government websites. In the UK, for example, sanctions lists can be found on the UK government website; or in the USA from the Office of Foreign Assets Control (OFAC) website.

 

It is important to identify if the type of trade – as well as individual persons and companies – are also affected. An example is the US banning imports of Russian crude, LNG and coal. Transactions involving military equipment or “dual-use” goods should also raise a red flag.

 

The principals involved in the transaction are responsible for conducting their own checks and should not rely on any due diligence performed by the intermediary. It is possible, and indeed likely,  that the legal position of the intermediary and the principal are different.

 

A related issue is that whether or not an entity is sanctioned, the reality of dealing with a Russian entity will expose all parties to the danger of non-payment as many Russian banks are either sanctioned or subject to prohibitions.

 

Before agreeing to participate in a transaction, ITIC strongly advises intermediaries to take specialist sanction advice from a law firm resident in the jurisdiction where each specific transaction is due to take place.

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