Navigating the global sanctions landscape in 2020
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Navigating the global
sanctions landscape in 2020
Diverging paths, increasing risks
October 2019
controlrisks.com
Sanctions report Sanctions report
Table of contents
The global sanctions landscape in 2020 01
Sanctions risk map 05
How can companies manage their compliance with
increasingly complex sanctions? 09
Five countries to watch in 2020 11
Iran 13
North Korea 15
Russia 17
Venezuela 19
Syria 21
Beyond sanctions: Foreign investment considerations 23
About us 24
The information contained herein does not constitute a guarantee or warranty by Control Risks Group Holdings Limited, its subsidiaries, branches and/or affiliates (“Control Risks”)
of future performance nor an assurance against risk. This report is based on information provided by the client and other information available at the time of writing. It has been
prepared following consultation with and on the basis of instructions received from the client and reflects the priorities and knowledge of the client as communicated to Control
Risks. Accordingly, the issues covered by this report and the emphasis placed on them may not necessarily address all the issues of concern in relation to its subject matter. No
obligation is undertaken by Control Risks to provide the client with further information, to update this information or any other information for events or changes of circumstances
which take place after the date hereof or to correct any information contained herein or any omission therefrom. Control Risks’ work and findings shall not in any way constitute
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Copyright © Control Risks. All rights reserved. This document cannot be reproduced without the express written permission of Control Risks. Any reproduction without
authorisation shall be considered an infringement of Control Risks’ copyright.
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Sanctions report Sanctions report
The global sanctions landscape in 2020
Sanctions regimes are increasingly Middle East and Asia-Pacific to pursue under US sanctions.1 Partly, this
complex and less predictable. US more independent policies to grow reflects Trump’s more unilateral
foreign policy under President Donald their own spheres of economic and and nationalist approach to foreign
Trump has become markedly more political influence. policy. Geopolitical dynamics
protectionist under his “America First” have also made it increasingly
There are five key trends shaping
mantra, emphasising geopolitical difficult for the UN Security Council
global sanctions risks:
competition and stark pursuit of to adopt collective sanctions
national interests. Growing polarisation 1. The US is introducing and enforcing against governments – think of
between the presidency and sanctions more frequently. Syria, for example – that enjoy
Democratic-controlled Congress has Sanctions have been perceived the protection of Russia or China.
also resulted in more personalised as a low-cost and low-risk foreign However, while the US can afford
and contested policy outcomes. policy tool since the Barack to impose unilateral sanctions
US relations with traditional allies Obama administration, but that has because of the centrality of the
(particularly in Europe) have deteriorated become much more acute under US dollar to the global financial
amid disagreement over a suite of President Trump. The US is also system and commerce, their lack of
strategic issues, including sanctions making extensive use of so-called international legitimacy and buy-in
on Iran and Russia. Meanwhile, secondary sanctions aimed at complicates their implementation
US and European retrenchment is pressuring non-US companies and antagonises the US’s allies.
encouraging regional powers in the to stop business with countries
Source: The U.S. Department of The Treasury (https://www.treasury.gov/resource-center/sanctions/CivPen/Pages/civpen-index2.aspx)
Fig.1 The numbers: OFAC enforcement actions by year (2011-2019)
1.4 30
1,2 25
1.0
20
0.8
15
0.6
10
0.4
0.2 5
0 0
2011 2012 2013 2014 2015 2016 2017 2018 2019
Cases Cases (non finance) Fines (USD billions)
1
Primary sanctions are restrictions applied to US persons, while secondary sanctions apply to non-US persons and are designed to prevent non-US persons from doing business with
a target of primary US sanctions. They have mainly been used in connection to Iran, North Korea and most recently Venezuela. There is very limited precedent for the enforcement of
secondary sanctions. However, the prospective penalties that secondary sanctions could impose on non-US organisations is often enough to encourage compliance with them.
5 01
Sanctions report Sanctions report
4. The US is encouraging its allies enforce these measures, and US responsible for or complicit in
to adopt their own sanctions. sanctions regimes will probably human rights violations or – notably
Gulf states have joined this trend, continue to be the most relevant for – corruption. Five other countries
developing blacklists of their own. businesses operating in the region. – Canada, Lithuania, Estonia,
While most of these are designed International financial hubs (such Latvia and the UK – have since
to target terrorism financing, others as Switzerland, Hong Kong and passed similar provisions, with the
are driven by foreign policy aims. Singapore) have also traditionally EU and Australia also considering
For instance, the Terrorist Financing maintained independent sanctions proposals along these lines. While
Targeting Center (TFTC), which regimes to counter terrorist financing, these measures have had only
comprises the US, Bahrain, Kuwait, money laundering and other limited direct impact on business,
Oman, Qatar, the UAE and Saudi transnational threats, though these designations will not remain static
Arabia, in May 2018 imposed are mostly aligned with the UN. and will continue to reflect human
sanctions against the leader of rights and corruption investigations,
5. Extraterritorial sanction regimes
the Lebanese Shia movement as well as broader geopolitical
are proliferating. Extraterritorial
Hizbullah, Hassan Nasrallah, considerations. Being able to better
regimes that apply to persons in
and other entities and individuals assess the likelihood that a current
countries not otherwise subject
affiliated with the movement. These or prospective business partner
to sanctions are likely to continue
are intended to counter Hizbullah’s will feature on a Magnitsky list in
to spread. The US was the first
political power in Lebanon and the future will allow organisations
country to adopt sanctions to
reduce Iran’s influence across the to make more informed, forward-
punish human rights abuses (the
Middle East; Hizbullah is widely looking decisions about new
Magnitsky Act in 2012, which
viewed as acting as an Iranian business relationships.
targeted Russia specifically), and
2. There is disagreement within 2017 enacted the Countering US also disagree on the targets for proxy. However, Gulf countries
in 2016 it expanded their reach
the US on the use of sanctions. America’s Adversaries Through sanctions, which means companies are still building the capacity to
to any foreign nationals deemed
Policymaking under Trump often Sanctions Act (CAATSA) over now need to comply with two sets
shows differences between Trump’s objections, and then tried of blacklists. The EU has sought
the president’s intentions and to prevent him lifting sanctions to save the nuclear deal since
members of his administration and on Russian company Rusal this the US withdrawal by updating
the Republican Party. This political year. Conversely, Congress also its Blocking Statute (to forbid EU
polarisation in Washington means wants more sanctions on Saudi entities from complying with US
that significant differences over Arabia but is split over sanctioning sanctions on Iran and to allow
sanctions policy exist between Europe for the Nord Stream gas them to recover any associated
Authors:
the Trump administration and pipeline from Russia. Congress damages) and setting up a special
Congress, particularly after the is generally aligned with the purpose vehicle (the Instrument
opposition Democrats’ gains in administration behind Iran and for Supporting Trade Exchanges,
the November 2018 midterm Venezuela sanctions. or INSTEX) to enable certain
election. In short, Congress is transactions with Iran. However, the Henry Smith
3. The EU and US are growing Sorana Parvulescu Partner
trying to “codify” sanctions – or bloc has been unable to offset the
apart on sanctions policy. Senior Partner Compliance, Forensics,
require Congressional review – to impact of US secondary sanctions;
Divergence between Trump’s US
make them more difficult for the EU businesses will not risk their Global Risk Analysis and Intelligence
and key European allies on major
administration to remove. This relationships and businesses in the
foreign policy issues – above all,
more aggressive stance shows US for Iran. Over the longer term,
Iran – is increasing sanctions risk
Congress trying to regain control the EU will be looking to increase
and complicating compliance for
over foreign policy, after having its economic autonomy from the
companies. The US’s exit in May
delegated much of it to the White US, including through its own use Jonathan Wood
2018 from the nuclear deal has
House over the decades. The of sanctions and measures that Director
exposed EU companies to sector
division has been stark when it give the euro currency a greater
wide US restrictions. The EU or Global Risk Analysis
comes to Russia: Congress in role in international trade.
02 03
Sanctions report Sanctions report
Sanctions risk map
Methodology
Control Risks’ CORE country risk experts evaluated sanctions risk according to the ability of companies to operate in
compliance with applicable sanctions regimes, primarily, UN, US and EU but also third-country sanctions (where relevant).
It encompasses the focus and breadth of sanctions which may apply to multinationals doing business in the country, and
also considers broader implementation and enforcement trends (particularly at the US and the EU levels). Additionally, the
ratings reflect the underlying geopolitical, political, security and integrity factors driving sanctions risk in the country, and
the likelihood of applicable sanctions regimes being strengthened or relaxed as a result.
In time, our CORE country risk experts will expand this analysis to cover a broader spectrum of risk ratings.
Sanctions risk ratings – definitions
Risk rating Definitions
Extreme Sanctions risks severely limit investment or operations in most sectors of the country, and pose
critical compliance, reputational and operational risks to business. For example:
omprehensive UN, US, EU and third-country sanctions apply, including arms and
C
trade embargoes.
Sanctions enforcement, particularly from the US and the EU, is very strict and proactive.
here is widespread support within the international community for sanctions, on grounds that the
T
country’s behaviour significantly transgresses international norms and/or poses significant threats
to global and regional security.
High Sanctions risks greatly hinder investment or operations in most sectors of the country, and pose
significant compliance, reputational and operational risks to business. For example:
Sectoral sanctions restrict or prohibit transactions with specific economic sectors.
Trade sanctions ban the provisions of certain goods or services, including arms embargoes.
argeted UN, US, EU and third-country sanctions apply to significant groups of individuals or
T
entities with interests in the economy.
Sanctions enforcement, particularly from the US and the EU, is strict and proactive.
here is generally strong support within the international community for sanctions, on grounds that
T
the country’s behaviour significantly transgresses international norms and/or poses significantly
threats to global and regional security.
04 05
Sanctions report Sanctions report
Fig.2 Sanctions risk ratings
Medium and low risk countries not depicted
Russia
North Korea
Syria
Iran
Libya
Cuba
Iraq
Yemen
Venezuela
Somalia
Zimbabwe
Extreme
High
06 07
Sanctions report Sanctions report
How can companies manage their compliance with
increasingly complex sanctions?
Source: The U.S. Department of The Treasury (https://www.treasury.gov/resource-center/sanctions/CivPen/Pages/civpen-index2.aspx)
Fig.3 The numbers: OFAC enforcement actions by sector (2011-2019)
Financial services 47
Manufacturing 15
Information, communication and technology 15
Pharmaceuticals and healthcare 10
Grand Total Oil and gas 14
147 Logistics and transport 7
Retail trade and luxury goods 6
FMCG 5
Insurance 5
Other 23
1. The US and the EU have given lear management support and buy-in
C The EU has also published due
you guidance to follow. The US for sanctions compliance diligence guidance for companies
sanctions enforcement agency, the considering whether and how to
he importance and centrality of
T
Office of Foreign Assets Control undertake due diligence on business
risk assessments to understand and
(OFAC), released its sanctions opportunities in Iran. This takes
evaluate your exposure
compliance programme (SCP) organisations through a series of
guidelines in May 2019, which he development of internal controls
T potential transactions, assessing the
coincided with one of the biggest to address the risks that you face level of risk and recommending a
annual sanctions conferences in commensurate level of due diligence.
esting and auditing these controls,
T
Washington, DC. The guidance
and responding to any shortcomings 2. You should monitor enforcement
is consistent with previous
actions. OFAC publishes its
advisories released by other US raining on sanctions compliance
T
enforcement actions on its
government agencies about processes for different sets of
website with a helpful summary
financial crime compliance, most employees.
of the nature of the violation, the
notably anti-bribery and corruption. FAC has made it clear that the
O decision-making process it went
The guidance recommends five presence and application of a SCP will through to determine the severity
pillars as central to a sanctions be taken into consideration when it of the penalty, and – increasingly –
compliance programme: considers enforcement actions. commentary on the nature of the
08 09
Sanctions report
compliance commitments that the their sales and marketing activities, a legal review of your exposure
organisation has made in response can expose them to sanctioned points and establishing the ultimate
to the enforcement action. These countries and trigger violations. beneficial owners and controllers
enforcement actions are a rich and We have seen this in several cases of your counterparties. There is
concise source of guidance for with clients in recent years. OFAC’s limited guidance from government
people responsible for sanctions designations of companies and agencies about how far your due
compliance, which we monitor on individuals as sanctioned entities diligence should go to consider
behalf of clients. They can help also demonstrates how countries your immediate counterparties’
you understand how sanctions like Iraq and the UAE can be used customers and relationships. In our
violations occur, how OFAC by networks seeking to circumvent experience, a risk assessment of
interprets companies’ practices and sanctions. Your third-party risk a relationship or transaction you
behaviours towards compliance, and due diligence assessments are considering, and identifying
and the types of remedial steps that of agents, distributors, suppliers your blind spots, is typically a good
organisations are encouraged to and clients in countries that trade starting point for determining the
adopt to improve their compliance or share borders with sanctioned level of due diligence you should
processes. It can be helpful to use countries should specifically apply. Having done your initial due
these actions to build your business address your exposure to sanctions diligence and risk assessment, you
case for adjustments to your from these entities. Not knowing then need to ensure that any red Five countries to watch
organisation’s existing practices their business activities is not a flags that required remediation are
and to develop typologies and case good defence. addressed and monitored. in 2020
studies in training sessions.
4. Your due diligence needs to go 5. You need multi-disciplinary
3. You should understand your deeper than your immediate teams to understand and
sanctions risk in countries that counterparties. Recent OFAC monitor sanctions risk. Sanctions
are not sanctioned. OFAC’s enforcement actions demonstrate have a crucial difference from
guidelines specifically point out that the need to consider sanctions other financial crime regulations
a good SCP should be designed to exposure throughout your value chain that companies need to comply
prevent employees from engaging – suppliers through to customers with. Sanctions are a foreign policy
in misconduct. The frontline and everything in-between. tool subject to a range of political,
staff responsible for growing Furthermore, the political security and economic drivers that
your business will be aware that messaging from representatives other financial crime regulations are
countries like North Korea, Iran of the US Departments of not affected by. As such, we see
and Syria have sanctions and Treasury and State under the companies and financial institutions
compliance challenges. However, Trump administration has called increasingly approaching sanctions
your colleagues might not always on companies to consider their risk assessments and monitoring
think the same way about countries customers’ customers in their due with a broader range of skill
that trade with sanctioned diligence and risk assessments. sets and disciplines. Legal and
countries, like China (with North Although there is not a prescription compliance teams benefit from
Korea) or Turkey (with Iran), but that to do this in OFAC’s guidelines the insight and understanding
are not sanctioned jurisdictions. for a SCP, the political tone of politics and diplomacy that
Recent OFAC enforcement has been made clear by the government affairs and political risk
actions and our own due administration. In our experience teams can bring.
diligence experience indicate that with clients, sanctions compliance
organisations’ supply chains, and due diligence will typically include
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Sanctions report Sanctions report
Iran
Outlook What to watch Implications
EU and UN sanctions on Iran remain Triggers for increasing sanctions risk: ompanies with US interests/
C
lifted as a result of the implementation exposure will most probably choose
ther signatories to the JCPOA
O
of the Joint Comprehensive Plan of to continue to comply with US
withdraw from the agreement, which
Action (JCPOA) in January 2016. primary and secondary sanctions.
effectively collapses.
However, sanctions risk increased
he EU’s countermeasures are
T
sharply with the US’s withdrawal from Iran produces enough fissile material
unlikely to encourage – or force –
the JCPOA in May 2018, which led to to approach nuclear weapon
European companies to do business
the re-imposition of US primary and “breakout” thresholds.
with Iran beyond humanitarian-
secondary nuclear sanctions in August
ignificant security incidents by
S related business.
and November 2018. The US in 2019
Iranian proxies against US assets or
also increased its sanctions regime as owever, legal disputes in Europe
H
personnel in the Gulf.
part of its “maximum pressure” policy. are likely to question the application
The growing burden posed by US resh satellite or ballistic missile
F and validity of US secondary
sanctions on various sectors of the launches suggesting technological sanctions, and award damages
Iranian economy means that Tehran’s advances. from non-US companies that
incentives to comply with the nuclear have chosen to comply with US
ussia supporting China in its trade
R
agreement have diminished. Iran will secondary sanctions.
war with the US.
increasingly breach the nuclear deal
ompanies that have the legal space
C
over the coming months to pressure
and risk appetite to engage Iran will
the EU into offsetting the impact of US Triggers for decreasing sanctions risk: still face a range of practical and
sanctions on its economy, and to give
he US and Iran engage in direct
T operational challenges, principally
itself concessions it can offer to the
diplomatic talks, with a view to around banking and insurance.
US in return for temporary sanctions
relief and a return to negotiations. The negotiate a new nuclear deal.
EU is unlikely to systematically target S agrees not to enforce aspects of
U
Iranian persons and entities over the its secondary sanctions for EU trade,
next year, with its efforts focused and/or establishes some sort of
on how to retain or reformulate the cooperation around due diligence.
JCPOA. However, the EU’s position
will be contingent on the extent of
Iranian compliance with the JCPOA,
though we expect Iran to remain in
large part compliant with it.
Daryll O Hanlon
Senior Consultant,
Compliance, Forensics
and Intelligence
12 13
Sanctions report Sanctions report
North Korea
Outlook What to watch Implications
International sanctions have expanded Triggers for increasing sanctions risk: mid hopes for a US-North Korea
A
significantly since 2016 in response to nuclear deal and the possibility of
breakdown in US-North Korea
A
Pyongyang’s unprecedented nuclear sanctions easing, business interest in
nuclear talks, amid long-standing,
and ballistic missile tests in 2016-17. the North is tentatively emerging.
incompatible positions on
The US under Trump has pursued a
denuclearisation. owever, business deals with North
H
strategy of “maximum pressure” and
Korea – even indirect ones – will
has strengthened economic sanctions. resumption of long-range ballistic
A
continue to involve very severe risks,
However, diplomatic engagement missile and nuclear tests by the North.
including operational, non-payment
between North Korea, the US, South
and reputational risks.
Korea and China since early 2018
has the potential to reduce sanctions Triggers for decreasing sanctions risk:
risk over the next three to five years. istoric US-North Korea deal
H
While existing sanctions are being based on “phased” approach
enforced less strictly, a formal and full to denuclearisation in return for
lifting of UN, US, EU and third-country sanctions relief.
sanctions will take much longer – at
least some significant sanctions will
remain in place until the North has
made very substantial concessions.
A highly fragile diplomatic process
lies ahead over the next year, with a
persistent threat of breakdown and
re-escalation.
Julia Coym
Senior Analyst,
Global Risk Analysis
Courtney Zhou
Associate Consultant,
Compliance, Forensics
and Intelligence
14 15Sanctions report Sanctions report
Russia
Outlook What to watch Implications
Sanctions risk emerged in 2014 over Triggers for increasing sanctions risk: In the absence of new sanctions laws
Russia’s annexation of Crimea, and massive implementation against
evelations of new evidence of
R
involvement in the eastern Ukraine major businesses, the investment
Russian interference in elections in
conflict, military intervention in Syria, and appeal of Russia somewhat
the US in 2020.
domestic human rights and corruption improves, compared with 2014-16.
issues that escalated after Moscow’s evelations of malicious cyberactivity
R
ompanies with a significant
C
interference in the 2016 US election. in the US and an allied country,
presence in Russia have had enough
However, the sanctions regime has attributed to Russian state actors.
time to adjust their compliance to
largely stabilised in the past two years.
nother attack against a Russian
A stable sanctions risk.
Russia is refraining from moves that
defector or anti-regime figures in
could trigger new sanctions and/or more ussia’s countersanctions and import
R
Europe or the US.
robust implementation of existing ones. substitution policies have eroded in
Trump is under sustained bipartisan upture of personal rapport between
R many sectors, leading to lucrative
pressure from Congress to strike a Trump and Putin. opportunities for international
hardened stance on Russia ahead of the companies with a sophisticated
ussia supporting China in its trade
R
2020 election but continues to oppose understanding of sanctions risk.
war with the US.
more draconian sanctions as limiting his
ompanies with less exposure to US
C
flexibility to manage US foreign policy
sanctions risks, primarily Chinese,
towards Russia. The failure of the Mueller Triggers for decreasing sanctions risk: Japanese and Korean entities, as well
report to tie Trump’s 2016 victory to
durable de-escalation in the
A as ones from the Middle East, have an
Russia’s meddling, internal strains on the
conflict in eastern Ukraine, in line advantage over their US and European
EU’s readiness to roll over sanctions and
with the Minsk-2 peace agreement. peers on the Russian market.
the lack of clear vision for post-conflict
Syria have further de-incentivised new rump’s victory in the 2020
T elatively stable US-Russia relations
R
sanctions against Russia. The poorly presidential elections, which would under Trump may quickly come to an
calculated effect of sanctioning Rusal, push the Moscow meddling narrative end, with sanctions risk increasing,
which resulted in the effective revocation away into the past. if a new administration comes to
of sanctions under pressure from US power in Washington in 2020-21.
domestic and international business
lobbies, is also contributing to the US
administration’s unwillingness to press
sanctions against major Russian
businesses. Within the EU, while member Nabi Abdullaev
states are still broadly in agreement Director,
over sanctions adopted in response Compliance, Forensics,
to Ukraine events, they demonstrate and Intelligence
preparedness to ease the most
substantial of these sanctions if progress
is made resolving the conflict in the east
Alexey Eremenko
of the country. We do not anticipate
Senior Consultant,
a major breakthrough in the eastern
Compliance, Forensics,
Ukraine conflict over the next year.
and Intelligence
16 17Sanctions report Sanctions report
Venezuela
Outlook What to watch Implications
The US since mid-2017 has Triggers for increasing sanctions risk: S financial sanctions have made
U
significantly expanded its sanctions it difficult or prohibitive for many US
aduro holds highly fraudulent
M
regime against Venezuela, imposing companies to continue operating
congressional elections in 2020.
wide-ranging targeted, financial and in Venezuela. However, US oil
sectoral sanctions. Targeted EU and he Maduro regime jails Guaidó, or
T companies continue to operate
third-country (for instance, Canada) other members of the US-aligned under sanctions waivers.
sanctions also remain in place. opposition.
ore importantly, sanctions merely
M
Sanctions risk increased further after
enezuela finds ways to circumvent
V add to Venezuela’s complex and
National Assembly President Juan
sanctions with the help of allies such hostile business environment, in
Guaidó in January 2019 declared
as Russia, China and Turkey. which the Maduro government
himself interim president and called
has increasingly intervened to
for new elections. In the most
maintain control over aspects of
restrictive measure intended to force Triggers for decreasing sanctions risk: the economy. Reputational risk
regime change, the US in January
aduro is forced to step down by a
M will remain high as the Maduro
2019 imposed targeted sanctions on
critical mass of his own armed forces government stays in power.
state-owned Petróleos de Venezuela
(PDVSA), though it issued – and and leftist allies.
then renewed in July 2019 – waivers successful coup ousts the
A
for five US companies. International Chavista regime and puts the
pressure on the regime of President opposition firmly in control of the
Nicolás Maduro will persist, raising government.
the likelihood of further sanctions from
the US as well as the EU and third
countries. The Trump administration
is betting that tough sanctions,
without military intervention, will
dislodge Maduro and is thus likely to
continue to tighten sanctions. The
US retains several options for further
sanctions escalation, in the form of
additional secondary sanctions or
an embargo similar to that imposed
on Cuba that bans all US companies
from operating there. However,
tougher US sanctions on Venezuela
will likely include waivers for the US
oil companies that are keen to remain
in the country. The US government
is also unlikely to force Western oil
companies out because that would
Raul Gallegos
hand over control of the oil sector to
Director,
Chinese and Russian companies.
Global Risk Analysis
18 19Sanctions report Sanctions report
Syria
Outlook What to watch Implications
Targeted UN and sectoral US, EU and Triggers for increasing sanctions risk: oing business in Syria exposes
D
third-country sanctions continue to companies to a series of overlapping
resh evidence of the Assad
F
preclude most business activities from sanctions regimes beyond those
regime’s use of chemical weapons
US and European companies in Syria, applied to the Assad government.
and involvement in other war crimes.
even as the security environment is This is because of the presence of
likely to become more conducive to Iranian, Iraqi, Lebanese and Russian
business – particularly reconstruction business interests that are subject to
Triggers for decreasing sanctions risk:
work. However, these sanctions are their own sanctions regimes.
very unlikely to be relaxed if President egime change that leads to the
R
eyond sanctions risk, companies will
B
Bashar al-Assad remains in office, installation of a political leadership
also face reputational risks if they are
which is the most likely outcome given amenable to Western countries.
perceived as legitimising the actions
reduced US support for opposition he EU and US come to a pragmatic
T Assad took during the conflict.
groups and Russia and Iran’s realisation that they will be better
continued military and political support omprehensive sanctions regimes
C
able to exert influence in Syria and
for him. Assad is likely to further have provoked fuel and other
that they would otherwise lose
consolidate his position over the next shortages, as well as a broader
business and other opportunities
year, ensuring he remains in power economic turndown. These
unless they eased some of their
during any post-conflict transition. The issues, combined with decrepit
restrictions.
US will also maintain intent to sanction power, telecommunications and
Syria as a secondary means to apply other infrastructure, will also pose
economic pressure on Iran, which has operational risks to companies
backed Assad throughout the conflict. looking to re-enter Syria.
More broadly, a general breakdown in
the rule of law means that militia and
militant groups operate checkpoints,
or control the movement of goods or
people and natural resources to extract
profit – in turn hindering operations in
various parts of the country.
Andrew Freeman
Analyst,
Global Risk Analysis
20 21Sanctions report Sanctions report
Beyond sanctions: Foreign investment considerations
Focus on the Committee on Foreign Investment in the United States (CFIUS)
National security concerns around foreign direct investments (FDI) are a growing concern for multinational companies and
their legal advisors the world over. As the global threat landscape continues to evolve, matters including cybersecurity
vulnerabilities, dual-use technologies with civil / military fusion, intelligent (information) warfare, and global supply chain
considerations are increasingly being monitored and scrutinized in the context of foreign direct investments (FDI) for possible
national security concerns, and the respective risks and opportunities they create. Savvy global investors are advised to
keep an eye on The Committee on Foreign Investment in the United States (CFIUS) and other foreign investment regulations
that continue to develop to ensure their investments can stand-up against growing scrutiny now and in the future.
Risk on the rise
The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) has created a new reality for US companies and
foreign investors partaking in transactions focused on critical technologies. On September 17, 2019, the Department of
Treasury released draft regulations to implement the changes that FIRRMA made to CFIUS’s jurisdiction and processes.
These changes represent a significant expansion of authority and were necessary to address the evolving national security
threat environment, particularly the risks inherent in Technology, Infrastructure, and Data (“TID”) US Businesses.
While the updates present a more complex regulatory environment, the release of the draft regs provides needed clarity for
companies and investors to understand and adjust to the current state of play.
Successful models and deal-making strategies will account for the nuance of an evolved security and technological
environment, while recognizing the need to engage early and aggressively to address potential national security concerns.
Learn more about CFIUS and FIRRMA here.
John Lash
Principal,
Compliance, Forensics,
and Intelligence
22 23Sanctions report Sanctions report
About us
Control Risks exists to make our clients succeed. We are a specialist risk consultancy that helps to create secure, Our experience with sanctions
compliant and resilient organisations in an age of ever-changing risk.
dvised a chemical company on their
A eveloped a bespoke database that
D how tighter international sanctions
Control Risks’ 3,000 employees work out of 36 offices around the world with experience in 178 countries and 18 sectors. exposure to the shareholders of a detailed key global (UN, EU and could affect their business with Iran
With experts strategically placed around the world, we have a unique blend of skills and local insights to support our Russian partner; the nuances of US) and third country sanctions and how to mitigate the associated
clients and their legal counsel as they consider sanctions globally. entities part-owned by sanctioned regimes on dozens of countries of sanctions risk.
individuals; and the risks of commercial interest to a
Contact us for more information about our experience with sanctions and how we can help you. apped a businessman’s corporate
M
secondary sanctions for similar multinational chemical company.
interests to identify ties to senior and
companies. Delivered information at regular
sanctioned figures in Syria. During
risk-based intervals, with
elivered a country risk assessment
D our project, sanctions were imposed
supplementary consulting and
and multiple enhanced due against the subject and one of his
monitoring of significant political or
diligences for a multinational bank companies. We then assessed the
legal developments which could
considering whether to finance a risks of sanctions being expanded to
impact the client’s exposure.
multi-billion-dollar transaction with include the subject’s other companies
Such developments included
Copenhagen Iran under an OFAC licence. and extended family.
Moscow international conflict, unrest, human
Amsterdam
London Berlin Investigated the sale of electronics rights violations, and proposed or orensic data analytics to identify
F
Frankfurt
Paris
Zurich in North Korea on behalf of a pending legislative changes. sanctioned individuals and entities in
Chicago
New York Beijing Japanese client. Advised on our client’s financial and sales data as
Los Angeles
Washington DC
Erbil Seoul Tokyo onducted an assessment of the oil
C
Baghdad
Islamabad potential sanctions considerations part of a forensic investigation into
Houston Basra Shanghai output implosion in Venezuela and
Al Khobar
Dubai
Delhi and provided recommendations for potential sanctions violations in
Abu Dhabi Hong Kong how oil production is expected to
Mexico City Mumbai export controls enhancements. multiple countries.
be impacted by tighter US
Panama City Lagos apped the business interests of
M sanctions in the future. e identified the historical changes in
W
Bogotá Port Harcourt
Singapore major sanctioned entities in Iran’s shareholding structure of a company
Nairobi rovided a nuanced assessment of
P
Jakarta consumer goods sector, enabling a in Myanmar to identify the sanctions
sanctions, their applicability and
client to place informed restrictions risks that our clients might inherit
political motivations for a Japanese
Control Risks office on marketing and sales activities through an acquisition.
Forensic collections hub Sao Paulo conglomerate. The client then
Data centre location Johannesburg of distributors.
formulated a strategy that serves as
Sydney
Control Risks office
Forensic collections hub
dvised an international oil
A the foundation of a sanctions-related
company on the likely future policy in Russia.
Control Risks office
sanctions the US and the
Data centre location onducted a scenario planning
C
international community will
exercise for a manufacturing
implement against Venezuela.
multinational that included a view of
24 25Sanctions report Sanctions report Notes 26
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