Compliance with International Sanctions and Embargos

Compliance with International Sanctions and Embargos

The international financial sanctions are an instrument of the foreign policy of France.

Contrary to natural or legal persons or entities, sanctions are intended to impose a freeze of funds, assets and economic resources, as well as their financial transactions. In contrast with a country, financial sanctions are intended to prohibit trade in targeted goods and services and may include freezing measures in respect of persons.

There are three types of international financial sanctions:

Sanctions imposed by the UN: A resolution of the Security Council of the United Nations Organization sets up a system of financial sanctions, for each country to apply and transpose into a national law, if necessary through the European Union.

Sanctions implemented at the European level: They are a tool of the Common Foreign and Security Policy (CFSP) and take the form of a common position of the Union. When the common positions decide of an action in the areas of competence of the European Community, they are implemented by a regulation of the Council or the Committee. European regulations have the force of law in the French legal system.

Sanctions implemented at the (French) national level: they are implemented in accordance with ArticleL151-2, Article L562-1 or Article L562-2 of the Monetary and Financial Code. Articles L562-1 and 2 are implemented in accordance with Articles L562-3 to 562-11 of the Monetary and Financial Code.

In addition to these regulatory requirements, financial institutions and companies must take into account the risk of image and reputation. This major risk often requires going beyond the Laws and Regulations. For example, it is impossible not to consider the sanctions related to the U.S. list of OFAC.

Finally are added to these obligations, the better known lists related to the natural and legal persons subject to sanctions as part of the fight against terrorist financing.

Several challenges emerge:

• Ensure that the company honors well its obligations relating to international financial sanctions, 
• Control that the software and tools put in place to meet these obligations are properly used (parameter setting, workflow related to alerts treatment, freshness of external databases that are used...)