Sanctions & exclusions

Why is this a risk?

Until recently, sanctions and exclusions were a mechanism used by governments (initially led by the United States) to restrict the sale of certain products or services to certain governments, countries or people.

These days, sanctions are being used as 'swords' as well as a 'shields'. They are being used by governments for political purposes and to place trade restrictions on companies and people. We have seen this most recently in the sanctions placed against Russia by the United States and European governments.


Examples of where this risk could affect you

  • A sanctioned company could buy some of your products through an online site and resell them in a restricted market

  • A sanctioned company might be acting as an agent or other intermediary in a foreign market

  • Your landlord might be a sanctioned company which may prohibit you from paying any money to them e.g. with OFAC sanctions

  • A company or individual may be excluded from participation in certain federal healthcare programmes


What sort of suppliers could be engaged in this risk area?

  • Any company that sells products or services might be restricted in trading with anyone on a sanctions list, which are produced by many governments under many different laws, regulations and executive orders

  • Suppliers that are located in certain areas where many sanctioned entities are located are at greater risk (e.g. in the Middle East or Commonwealth of Independent States countries) and may be on a sanctions list themselves or may be associated with someone on a sanctions list

  • Suppliers who trade in certain high-risk products (e.g. computers, weapons, dual-use machinery) are also at higher risk 

  • Your suppliers may have other customers that are on sanctions lists and your reputation could suffer as a result of being in the same category


How are these risks managed?

The risks of trading with someone that is on a sanctions list are normally managed through:

  • Checking all your customers (including those purchasing 'offline' as well as 'online') against a recognised list of sanctioned entities such as the IntegraWatch® | Compliance Screening database

  • Reviewing the operations of the supplier with deeper due diligence in the form of an IntegraCheck® | Integrity Due Diligence report if issues arise from the initial screening

  • Obtaining certifications and annual reviews of their business in high-risk areas to validate their sanctions compliance programmes.

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