Legal consequences in a global, digital world

Sanctions in 2023:

What You and Your Clients Must Know

Your clients always have various compliance concerns, whether based in the European Union, the United States, or anywhere else. Here’s one they must consider and prioritize in 2023: economic sanctions. Any business participating in any type of international trade will also be subject to international law; no matter where they’re located, what industry they’re in, or what size they are. In 2023, there are a few substantial factors heavily influencing trade regulation and restriction via country-specific and UN sanctions.

The consequences for violating sanctions, even unwittingly, are usually staggering. They may shut down a business. Some countries (like the U.S.) have recently become more aggressive about enforcing corporate conduct to strengthen their foreign policy. Here’s what you and your clients need to know in 2023 about legal compliance with sanctions, as well as potential requirements for legal translation and interpreting.

The Consequences for Violating Sanctions

Consequences for violating sanctions vary by country and offense. However, they're almost always painful and may go beyond financial penalties. Here are some examples:

  • Violating the Denied Persons List (DPL): the U.S. Department of Commerce maintains this list, which encompasses all individuals and entities denied export privileges. When businesses engage with people or entities on the list, they can incur civil penalties of $250,000 or twice the value of the transaction. Criminal violators of the DPL may face fines up to a million dollars (sometimes more). They may also face up to 20 years in prison. Repeated violations may lead to permanent sanctions for the business or even bans.

  • Businesses that are sanctioned: In the U.S., organizations that are “sanctioned” face more than financial consequences. There may be high attrition of customers, clients, memberships, and accreditations. Companies may also face adverse media coverage or lose investors.

  • Businesses that violate sanctions worldwide: On a more global scale, companies that violate sanctions may face geographical restraint or restrictions on their operations. They may face massive fines or have their assets frozen, depending on the scenario.

  • Individuals within businesses: Boards, directors, senior management, and officers of a company may be personally named in civil and criminal enforcement actions. Sometimes there may be multiple actions brought by multiple regulatory organizations for the same violations. This type of scenario increases the consequences significantly.

  • Failing to voluntarily disclose potential violations: In some cases, voluntary disclosure of a possible violation could help a company and at-risk individuals avoid criminal charges. The Monaco memorandum in the U.S. creates some protection for businesses that voluntarily disclose. However, disclosure of potential violations in some cases will quickly lead to lawsuits, investigations, and litigation.
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Steps to Avoid Violating Sanctions

Any business that may be in danger of violating sanctions should proactively avoid it in 2023. As mentioned above, the consequences are typically devastating. These are seven key steps to ensuring legal compliance and preventing a sanctions violation.

  1. Develop a plan: A company’s board and senior management should work together to develop a plan that prevents and addresses noncompliance with sanctions. Your complete plan will likely encompass: internal operations procedures, due diligence, investigation, and remediation.

  2. Write or update relevant company policies. Compliance with existing or new sanctions may require a business to update its company policies. If the organization has a multilingual staff or offices worldwide, it may be advantageous to work with a Language Service Provider, like Lionbridge, to offer regulated translation for updated or new policies and communications around them.

  3. Review customers, clients, and vendors: Businesses should use a sanction screening process or tool to validate the identities of all relevant parties against the Specially Designated Nationals list, Restricted Entities List, Blocked Persons List, or other applicable local sanctions lists. Some businesses may want to use software that automates this task, quickly verifying all profiles against required sanctions lists. In many countries, regulating bodies spell out this responsibility. In the UK, for example, the Office of Financial Sanctions Implementation (OFSI) requires organizations to make their own checks for sanctions compliance.

  4. Check transactions: Even one transaction that potentially violates sanctions is enough to trigger devastating consequences for a business or organization — either in the present or further in the future. Firstly, organizations should create a procedure to ensure current transactions are confirmed compliant before executed. Secondly, reviewing all historical transactions is vital to ensure compliance with OFAC or any other relevant regulatory bodies. Businesses can undertake this task alone, or with assistance from lawyers who specialize in international law. A Language Service Provider (LSP) like Lionbridge can also assist in this task, offering legal translation services and legal interpretation services for these audits.

  5. Provide training. Organizations should develop and deliver — or contract a third party to deliver — sanctions requirements training to all applicable staff. Ignorance of ever-changing sanctions rules doesn’t protect an organization or individual from steep penalties. If an employee is making transactions or interacting with new clients or customers, it may be safer to ensure they understand the most recent sanctions laws. Additionally, simply providing instruction to employees will send a strong message to regulating bodies that your organization prioritizes compliance. In the U.S., training should cover Office of Foreign Assets Control (OFAC) compliance with testing and certifications. (Attorneys may offer it.) If an organization has multilingual staff, businesses may consider securing simultaneous interpretation to ensure everyone comprehends training.

    As previously mentioned, it’s also prudent to develop and train employees to utilize a procedure for ensuring new transactions or clients are compliant. If the company uses software to assist with compliance, it will also be essential to train employees in utilization. Lastly, the organization should develop and train employees in a standardized procedure for reporting potential violations. Depending on the country, it may be imperative to quickly report suspicious activity to specific organizations, such as the National Crime Agency in the UK.

  6. Disclose when necessary. Disclosure is a complicated topic, but it’s generally advisable to share any potential violations as soon as possible. OFAC, the Financial Crimes Enforcement Network (FinCEN), and the Bank for International Settlements (BIS) all emphasize voluntary disclosure of potential violations. Often, it may reduce the severity of any consequences. For example, voluntary disclosure is a mitigating factor under OFAC guidelines. Penalties are generally reduced, and criminal charges may be avoided. Another reason to disclose potential violations promptly is to prevent whistleblowers and the attendant consequences: publicity, harsher penalties, less room for negotiation or remediation, etc. If an organization waits too long to disclose a potential violation, a disgruntled employee (or former employee) may disclose the information independently — in the harshest light possible. If an organization needs to disclose a violation, it may help to work with an attorney to negotiate penalties and mitigate the impact and publicity from an investigation. The process may be complex, requiring reporting to multiple agencies. Disclosure may also require naming specific board members or senior management. An organization and the individuals involved will fare better with a lawyer involved.

  7. Consider applying for a license (if applicable). In rare cases, a business may apply for a license to continue activities despite sanctions. In the U.K., companies would apply with OFSI for this type of license. In the U.S., they’d apply with OFAC. Notably, these licenses are challenging to apply for and require legal services. They also require continuous special reporting and paperwork. They’re more likely to be applicable in rare instances, not as a norm for the average business.
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Get in touch

Sanctions compliance is highly nuanced and more critical than ever in 2023. You and your clients have a lot of priorities already. Turn to Lionbridge to handle your legal translation and interpretation needs. Contact us to learn how we can assist with:

  • Translation and interpretation for internal investigations and compliance procedure reviews
  • Translating company-wide policies for use in a multilingual staff
  • Translating emails, agreements, sales reports, or any other discovery materials
  • Legal interpreting for depositions, hearings, and witness interviews
  • Legal interpreting for testifying in front of government regulatory bodies
  • Legal interpreting and translation for calls and correspondence with clients, vendors, board members, employees, and more
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