Managing Sanctions Risk Up and Down the Supply Chain

While direct counterparties have been the focus of most sanctions compliance efforts, recent enforcement actions signal an enhanced regulatory focus on indirect dealings involving sanctioned parties, jurisdictions or activities. OFAC has increasingly brought actions where the subject was one or more steps removed from dealing with a U.S. sanctions target and may not have known of the involvement of a sanctioned person or jurisdiction either upstream (such as an indirect supplier) or downstream (such as a subsequent purchaser, end-user or beneficiary of goods or services provided to a non-sanctioned customer). In this guest article, Jonathan Cross, counsel at Herbert Smith Freehills, discusses four recent enforcement actions that shed light on how OFAC views sanctions risk both upstream and downstream in the supply chain and offer compliance strategies and approaches in light of these insights. See “Compliance and Self-Protection in an Uncertain Sanctions Environment” (Nov. 1, 2017).

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