The Australian sanctions regime against Russia (and certain regions of Ukraine) may seem a world away, but it is having an impact on many Australian businesses that may inadvertently be doing the wrong thing.  There are rules about what you can import and export, as well as which people and entities you can deal with.  The penalties for companies in breach of the sanctions regime will be the greater of $2.2 million or three times the value of the sanctioned transaction – so it is important to get this right.

The naughty list – aka who you can and can’t deal with

First up, you better check the naughty list – aka the Department of Foreign Affairs’ Consolidated List.  There are strict restrictions on people and entities (including banks) that you can deal with, and the Consolidated List contains the details of every person and entity who is subject to targeted financial sanctions under Australian law.  You and your business cannot directly or indirectly deal with any of the sanctioned entities or individuals on the Consolidated List.

Recently, Russia has started adding high-profile Australians to its own naughty list. High profile business owners, as well as various journalists and politicians, have been sanctioned by Russia. If your business is associated with any of the people on Russia’s sanctions list, you may be barred from conducting operations in Russia even if the conduct is not sanctioned by Australia. 

Is your business being naughty or nice?

Under Australia’s sanctions regime it is prohibited to directly or indirectly supply, sell or transfer to Russia any of the following goods:

  • arms or related matériel (meaning ‘military means and equipment’);
  • aluminium ores (including bauxite), alumina and related products; and
  • items suited for use in certain categories of oil exploration or oil production projects in Russia.

It is also prohibited to provide financial assistance or provide a financial service that assists or is in relation to a sanctioned activity.

International partners

It is important to consider other nations’ sanction regimes against Russia if your business has transnational operations. You should ensure that any key persons within your business who are dual citizens, particularly of the U.S., are aware of their obligations under that country’s sanctions laws.  This might involve drafting a compliance or recusal policy to ensure that your business’ operations do not breach foreign sanction laws.

How do I stay out of trouble?

If you think your business may be in breach of Australia’s sanctions you can apply to DFAT for an Indicative Assessment, which will determine whether the conduct is in breach of Australian law. Alternatively, if the conduct does breach Australian law, you can apply to DFAT for a permit to continue that conduct despite it being sanctioned.