Now more than ever, U.S. and multinational companies must do everything they can to ensure strict compliance with international sanctions imposed on Russia, Belarus, and individuals linked to those governments.
That's because the U.S. Department of Justice ("DOJ") has made it clear that, after generally stepping up its efforts to fight white-collar crime, it is turning its attention to identifying and preventing Russia sanctions evasion and export violations:
- U.S. National Security Advisor Jake Sullivan told The Economic Club of Washington, D.C., that the Biden Administration is focusing on "evasion" of the "unprecedented" financial sanctions levied against Russia, Russian entities, Kremlin government officials, and other prominent Russian individuals.
- At a recent New York City Bar Association event, Deputy Attorney General Lisa Monaco stated that the new "focus should have a profound effect on businesses and their efforts to comply with U.S. laws." She continued: "one way to think about this is as sanctions being the new FCPA."
- According to Attorney General Merrick Garland, the DOJ "will use all of its authorities to seize the assets of individuals and entities who violate these sanctions." The DOJ has already taken the first step in that effort by establishing an interagency task force, known as KleptoCapture, to enforce U.S. sanctions, export restrictions, and economic countermeasures imposed on Russia, particularly those involving cryptocurrency.
Complying with the Evolving Sanctions Regime
For most companies, the first step in minimizing risk and ensuring ongoing compliance is to update their existing compliance programs. Revamping a current program is one of the most effective ways to ensure compliance with the changing landscape of the U.S. sanctions regime (naturally, companies that don't already have a compliance program should make it a priority to develop and implement one).
Specifically, we recommend companies review existing policies and procedures to ensure they are appropriate for the new sanctions environment, including the ever-increasing sanctions against Russia. We would also advise companies to scrutinize all existing customers and their supply chains (including third-party contractors) to ensure that no sanctioned or high-risk entities remain.
Equally important, companies should review their compliance efforts to identify potential violations. If that process uncovers a possible breach of sanctions, it's critical to conduct a thorough investigation to determine the best course of action.
Finally, in instances where a suspected violation has occurred, we would urge companies to voluntarily disclose potential breaches to the Department of the Treasury's Office of Foreign Assets Control ("OFAC") and the DOJ. Both agencies have issued guidelines for self-reporting mistakes and violations that can meaningfully reduce penalties for companies that violate sanctions regulations, including significantly reduced fines and minimized penalties.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.