International Sanctions
International sanctions have become extensive recently and are developing rapidly following changes in geopolitical conditions. All Norwegian companies and natural persons are obliged to comply with sanctions from the UN and restrictive measures from the EU which have been implemented in Norwegian law, as well as decisions on the freezing of funds adopted by the Norwegian authorities.
In addition, businesses may be subject to sanction regulations from a number of other countries, if they operate in a particular industry or within a particular geographical area, for example.
Sanctions exposure poses a major risk for a number of businesses within different industries, particularly industries that have extensive international trade and presence. Businesses without good frameworks and risk management for sanctions risk, among other things, loss of reputation, fines and exclusion from markets.
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Different types of sanctions
There are different types of international sanctions. A main distinction is between diplomatic og economic sanctions. Diplomatic sanctions involve breaking diplomatic relations.
Economic sanctions are intended to target economic interests. Examples of economic sanctions are:
- Export ban
- Import ban
- Travel restrictions
- Bans on making funds available
- Orders to freeze funds in bank accounts or funds belonging to specific persons, groups or entities.
Violation of the sanctioning regulations due to negligence
Violation of the sanction regulations is punishable. Both companies and individuals can be punished with fines, and natural persons can be punished with imprisonment. Both intentional and negligent infringement are punishable.
In the event of an assessment of negligence, it will be assessed which measures the company has taken to prevent and reduce sanction exposure.
Sanction risk and routines
In order for the company to be able to protect itself against sanctions violations, the sanctions risk must be assessed. Measures commensurate with the risk must also be implemented.
It may be necessary to implement measures such as updating the company's routines to avoid breaches of the sanctioning regulations. The routines should provide employees in the company with good guidance on, among other things, how the company should identify sanctions violations, whom to inform about current sanctions violations, and what measures should be taken immediately.
Direct and indirect sanction risk
Direct sanction exposure concerns cases where a business or person breaks the sanctions regulations by action or omission directly linked to the sanctioned.
A clear example is the case where a transaction is made directly to a listed person. Sanctioned persons, businesses, groups or authorities are, however, very well aware of the sanctions aimed at them and use various methods to move funds under the radar.
Methods used include the use of complicated ownership structures and shell companies to hide the connection to the funds. Indirect sanctions exposure is about the risk of sanctions violations through actions or omissions linked to others than those on the list, but which are controlled by those on the list.
It is the indirect sanction risk that poses the greatest threat to companies and obliged entities that have international exposure.
Our expertise
We have extensive experience in assessing businesses' risk of breaching the sanctions regulations, and in preparing frameworks and routines to prevent and reduce sanction exposure.
We assist with, among other things
Assessment of the companies' sanction risk
Preparation of frameworks and routines
Revision of existing frameworks and routines
Investigations related to suspected violations of the sanctions regulations
Assistance with sanctions due-diligence
Courses and training of employees
Legal issues related to the sanctions regulations
Contact us for assistance with international sanctions→
