Why it’s important to understand Sanctions and Embargoes

| July 2, 2014

First 5000 partner NAB offers a straightforward explanation of how sanctions and embargoes work, the ways in which they may impact your business and why it’s important to understand them.

When running a business it’s important to understand your obligations in relation to domestic and international sanctions and embargoes, and how they may potentially impact your business before entering into arrangements with offshore customers and/or their agents.

If you’re involved in any of the following transactions you’re at risk of a sanctions and embargo violation:

  • You make a payment directly to someone who is subject to a sanctions or embargoes program.
  • You make a payment to someone in a sanctioned country, even if their account is located in a non-sanctioned country.
  • The movement of funds and/or goods in your transaction involves a party who is subject to sanctions or embargoes (for example airlines, banks, shipping vessels and ports).
  • The ultimate recipient of your goods/service may be subject to sanctions despite you only dealing with a non-sanctioned intermediary.

What is a Sanction?

Sanctions are utilised by government(s) as a non-violent foreign policy in deterring financial crimes, human rights abuses, terrorism and nuclear weapon proliferation. Sanctions are specifically designed to influence and target a country, specific person, legal entity and/or organisation.

Sanctions can also affect financial institutions such as NAB and their customers by placing restrictions and controls on the movement of goods, services and money. These restrictions can include:

  • Prohibiting the transfer of funds to and/or from a sanctioned country and/or Specifically Designated Nationals (SDN);
  • Freezing the assets of a government, entity, individual and/or resident of a sanctioned country;
  • Prohibiting particular types of activities;
  • Imposing travel bans; and/or
  • Other financial and diplomatic restrictions.

What is an Embargo?

An embargo is a unilateral or collective restriction on the import or export of goods, material, capital or services into or from a specific country or group of countries. Embargos are similar to sanctions and are legal barriers to trade.

NAB and its customers are legally bound to adhere to sanctions and embargoes imposed by relevant jurisdictions. Any infringements on trade in sanctioned or embargoed goods and services or dealings with SDN’s are serious offences and can result in severe penalties, including seizure of goods, significant fines and even imprisonment.

For further information about sanctions and embargoes, and how your business may be affected, download the attached information booklet or speak to your Business Banker.

This story was first published on NAB Business View and is republished here with kind permission of the author. Read more Business View articles.