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Untargeted sanctions and compliance

Tom Fox | August 15, 2018

In a recent TedXtalk, trade sanctions attorney Robert Ward discussed the need for targeted sanctions rather than a shotgun approach, with no aiming in place. The administration’s shotgun approach has roiled financial markets and sown distrust with foes and allies of the United States alike. 

The recent set of trade sanctions by the US against Turkey are a case in point. Ostensively over the alleged wrongful detention of a U.S. pastor, the sanctions are now being used in a manner which is actually worse for the U.S. consumer as it is driving up the prices on the goods and services sanctioned. Further the sanctions are destabilizing markets in places far beyond the targeted country of Turkey. While it can only be hoped U.S. trade sanctions would be, as noted by Robert Ward, focused with a clear goal in mind and in conjunction with U.S. political and trade interests, that does not appear to be the case. 

For the compliance practitioner, these unpredictable and blunderbuss sanctions add another level of complexity and risk. Obviously, the risk comes from unwittingly violating a trade sanctions change which can now occur on almost a daily basis. If it is a direct manufacturer/customer relationship, however, at least you have a modicum of control. The more difficult issue will be around third parties and those parties down the line, fourth, fifth and other parties further remote from any direct contractual nexus with your organization.

The impetus for compliance will be to know all those suppliers, purchasers, and agents in your third-party chain. Is this something of which you require disclosure in your compliance terms and conditions? Even if you do make such a disclosure mandatory, have you enforced the requirement by auditing your third parties or even asking if they are using such sub-agents?   

While the political and economic dispute emanating from Washington would not appear to be compliance issues, The Man From FCPA sees them through that prism. I suggest CCOs consider that same view going forward.