How much time does your company spend on sanctions?

Sanctions and the related legislation are implemented globally at tremendous speed, and several countries add new sanctions to their sanction lists weekly. But what applies to your company? That is one of the questions that we we'll try to answer in this article.

Sanctions - or export controls - as they are often called have, for many years, been of relevance only to those few Danish companies that do international business and deal in a few specific, selected, sanctioned products, companies, persons, or countries.

Having witnessed a war in Ukraine for more than a year, it has become relevant for most Danish companies to comply with sanctions since the war has brought about many new sanctions. Consequently, most Danish companies must manage and comply with sanctions in general. This is the case for companies as such, but also for any groups, employees, and partners.

The volume of sanction legislation has become huge and may seem unclear to many. In the recent year, the EU has issued nine sanctions packages, and now a tenth package is about to be adopted. The EU sanctions packages are, primarily, aimed at Russia, and the US and the UK also issue sanctions against Russia on an ongoing basis, just as they often use the sanctions weapon against other countries and organisations.

The latter countries' sanctions are updated almost every week - with increased focus on specific persons, products, and companies. To make things even more complicated, there are still a great number of exemptions, just as several specific sanctions are issued against countries that have specific collaboration with Russia. It makes it difficult and time-consuming to keep updated on the entire set of sanction regulations, to put it mildly, since it is extended and adjusted regularly.

All EU sanctions packages are, de facto, Danish law.

However, you must also be updated on US and UK legislation if, as a Danish or EU registered business, you:

• Do business directly or indirectly with companies in the US and/or the UK
• Do business directly or indirectly with the US and/or UK authorities
• Use dollars and/or pounds as currency
• Have registered companies in the US and/or the UK.

If at least one of the above items fits your company, it is important to familiarise yourself thoroughly with the relevant legislation and with any risks that you should be aware of.

As is the case with all compliance with rules and guidelines, it is important to know where the legislation may impact your company more specifically, and which measures your company should introduce to avoid being affected. Thus, sanctions could advantageously be part of your compliance program.

Naturally, time, resources, and knowledge are required to familiarise yourself thoroughly with the legislation, but it's well spent.

Companies that are convicted of not complying with the sanction rules experience large consequences of a various nature, such as:

• Financial ones (fines, freezing of bank accounts or assets)
• Criminal ones (fines or imprisonment of senior employees or board members)
• Future collaboration (other companies not wanting to/allowed to collaborate with companies that are non-compliant with the sanctions legislation in force).

So, let's revert to our initial question: How much time does your company spend on sanctions?

Perhaps, we should have asked instead: Does your company spend sufficient time on sanctions?

To comply with all new sanction provisions, you should familiarise yourself thoroughly with the legislation and its possible impact on your company. Finally, your company should prepare a compliance program in this area, including a sanctions policy.

If you need assistance or a piece of good advice, please do not hesitate to contact us for a non-binding talk.