Curt Clements from Move One explains the critical need for sanctions compliance.
As global tensions rise, particularly with potential political shifts in the US, there is a growing need for businesses to be acutely aware of Russian sanctions and the risks they pose. The interconnected nature of global business means that even companies not directly operating in Russia must ensure compliance. The US and EU governments wield extensive enforcement powers, and if your company transacts in USD or uses the US banking system, it is crucial to understand not only your customers (KYC) but also the vendors you work with.
Key Indirect Exposure Risks
- Indirect Exposure
Ties between your suppliers, partners, or customers and Russia could indirectly affect your business through sanctions.
- Financial Transactions
Transactions in USD or through global banking systems could be flagged or blocked if they involve sanctioned entities, leading to financial losses and delays.
- Compliance Obligations
Companies must ensure their entire supply chain complies with international sanctions, as non-compliance can result in penalties and reputational damage.
- Reputational and ESG Risks
Ignoring or violating sanctions conflicts with a company’s ESG (Environmental, Social, and Governance) policies, particularly under the ‘Governance’ and ‘Social’ components. Non-compliance can lead to legal penalties, financial risks, and significant reputational damage, all of which undermine responsible governance and ethical business conduct.
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UN Global Compact Considerations
Members are expected to align with principles related to human rights, labour, environment, and anti-corruption. While the Compact doesn’t explicitly enforce sanctions compliance, it implies a commitment to uphold international laws and norms, indirectly encouraging adherence to sanctions.
Supply Chain Transparency ...
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