How regulations and standards influence the global trade – Part 3: Sanctions


The global trade is influenced by regulations and standards more than ever. Last week I provided you an overview about the new ISO  9001:2015 standard. That was one of the topics served during the Business Breakfast with our partners EcoVadis and POOL4TOOL. The event revolved around the latest sustainability policies and the question, which challenges and impacts companies will face. This week it is about sanctions.


In today’s blog entry I’d like to enlarge upon a topic that should be in every business owner’s mind: sanction control. Sanctions are used as instruments to put economic or political pressure on persons, organizations or governments with the aim to prevent the trade with them. Thus states and authorities create and publish lists like the List of foreign Terrorist Organization, CFSP (EU) and US DPL (Denied Persons List) including hundreds of thousands of persons and organizations. The lists are continuously being adapted to the current political and economic situation in the world – meaning that they can change from one day to the next.


Responsibility for trading with business partners

Currently organizations are responsible for the trade with direct business partners, with suppliers and customers. In Germany trading already starts with the solicitation of an offer. Thus it requires a careful handling in daily business.

Don’t make the mistake to consider sanctions as well-meaning proposal – a breach against sanction lists leads to drastic punishment. Firstly this can be a financial punishment. In Europe fines range in the single-digit or three-digit million area whereas the USA impose penalties reaching the one billion mark. Moreover managing directors or general managers can be sued in person.


A billion settlement due to violated sanctions

In case of the French bank BNP Paribas SA, the organization was sentenced to five years approbation with a record $ 8.9 billion settlement resolving claims that it violated sanctions against Sudan, Cuba and Iran.

This task must not be underestimated by companies collaborating with hundreds or thousands of suppliers, nevertheless being aware of current sanctions. Without automation this is simply not possible. The risk monitoring processes of the riskmethods software solution cover this problem for instant by automatically sent messages if a customer gets in touch with sanctioned business partners.

Next week our four-part article series is coming to an end with the forth topic: the Dodd-Frank Act.


And if you want to learn more about sanctions, please read also the articles of our expert Thorsten Langer:
Prohibition of provision: The new EU guidelines for “indirect provision”

Time to screen the US sanctions lists

Please let us know what you think about the novelties in this sector by writing a comment!

Rolf Zimmer is a founder and managing director of riskmethods, and is responsible for Finance, Product Strategy and Customer Success Management.

Rolf has been working in software business and procurement for 18 years. He has excellent knowledge in the areas of procurement, supply management and risk management – which he gained from working inside procurement departments as well as from consulting activities at SAP, Ariba and Emptoris, among others. His previous position as Sales Director at IBM included responsibility for distribution of the “Emptoris” Supplier Relationship Management suite and associated consulting services.

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