Sanctions Bill: What is the price of cooperating with sanctioned companies?

International sanctions against Russia are political and economic measures aimed at stopping Russia’s aggression against Ukraine. The world community supports Ukraine economically and financially. As for business, Russia has shown that it is not a reliable partner. However, there are still companies and entrepreneurs that intentionally or because of negligence ignore ties with Russia. Such businesses are threatened with legal, reputational and financial problems.

* Some linked materials were published only in the Ukrainian language. Please use any web translator to read them.

Violating Anti-Russian Global Sanctions Is How

Despite all the bans, risks, and considerations of humanity, some Western companies violate the sanctions.

"Ekonomichna pravda" writes that Russian companies circumvent the sanctions and buy equipment for ammunition production from the EU.

The German pharmaceutical company "B.Braun" continues doing business in Russia, sponsoring the aggressor, and in 2021 alone, replenished Russia’s budget by 12 mln USD. For this money, Russia can buy 170 “+"BM-30 Smerch" missiles or any other weapon with which the occupants can kill Ukrainians.

Limited Liability Company "Insurance Company Johnson" is a member of a joint holding company with a counterparty operating under the jurisdiction of the Russian federation. The parent company is SC JOHNSON&SON, INC. The registration address is included in the list of risky jurisdictions of the Global Terrorism Index.

According to the R&D center of YouControl, the most significant number of entrepreneurs who continue working in the Russian market are in Turkey, China, Iceland, Slovenia, and Greece. But in other countries, there are enough of them too. All these companies take significant risks with their money and reputation.

Companies Will be Punished for Cooperating With Russia

The New York Times reports that the US Government has warned foreign banks about the illegitimacy of helping Russia evade sanctions. According to the Times, those who support Russian companies or oligarchs are subject to financial constraints because of the Ukraine conflict and lose access to US and European markets.

According to Deputy Treasury Secretary Adewale Adeyemo, sanctions imposed by the United States can be extended to those who provide material support to sanctioned individuals or entities. He said, 'I want to make it clear to those institutions in our country and elsewhere that have not imposed sanctions that the United States, our allies, and partners will act decisively if they violate our sanctions.'

Is it Possible to Avoid Punishment for Having Ties With Sanctioned Counterparties?

Having risky counterparties can result in negative financial, reputational, and operational consequences:

⚪ fines;

⚪ seizure of property and accounts;

⚪ blocking of banking transactions;

⚪ loss of reputation due to public criticism.

Even if links are distant and mediated through typical contractors and places of registration, a connection with a counterparty at levels 3-4 is still considered as cooperation and a violation of sanctions. Business contacts, especially new ones, must be subject to particular attention.

It can take years to pay off a bad decision.

To Get Things Done, Take the Right Steps

Working in countries with socially unacceptable policies, especially those that may lead to terrorist financing, requires serious risk management and utmost caution.

A firm's objective of conducting business ethically is desirable if the objective is to avoid partnering with Russian and Belarusian businesses. The links with terrorist countries can be traced among partners, suppliers, customers, and other counterparty connections. You can discover Russian and Belarusian oligarchs' hidden assets and connections with PEPs in other countries with YC World.

In fact, it is about risk management and the need to be as careful as possible while working in countries with socially unacceptable policies, especially when these policies can lead to terrorist financing.

Supposing the goal of companies is to do business ethically. In that case, it is desirable to exclude links with Russian and Belarusian businesses.