Violating US sanctions carries serious consequences. A string of high-profile cases, some of which are set out in the table below, highlights the aggressive approach taken by the US for breaches of its sanctions laws.
A common theme in these cases is the deliberate structuring of transactions to avoid the sanctions laws. Payments messages were deliberately manipulated to omit information about US-sanctioned parties. In many cases financial institutions developed written guidance and instructions outlining how payment operators should enter information in order to exclude references to US-sanctioned parties in payment messages sent to the US.
Click here to view the table
What does this mean for Australian companies?
Australian companies who deal with jurisdictions or companies subject to US sanctions need to be alert to the potential consequences of breaching US sanctions laws, especially where they conduct transactions that are denominated in US dollars or have US branches.
Further, it is not enough to have a sanctions policy. Australian companies that have a relevant connection to the US should have a robust compliance system that monitors and detects non-compliance with the policy. This is essential as full and timely cooperation with law enforcement where an issue is identified can also go a long way to mitigating the amount of any fine.
What about Australian sanctions laws?
There are two main sources of Australian sanctions laws:
- those that the Australian government implements in response to resolutions by the United Nations Security Council which are contained in the Charter of the United Nations Act 1945 (Cth) and country specific regulations made under that Act; and
- those that the Australian government imposes independently of the United Nations Security Council which are contained in the Autonomous Sanctions Act 2011 (Cth) and the country specific regulations made under that Act.
To date, the Australian regulator, DFAT, has not been as aggressive in enforcing these laws. However, if the trend of global regulation led by the US continues, it may only be a matter of time before the Australian regulators are forced to take a more heavy-handed approach to breaches of Australian sanctions laws