Sanctions and Embargoes

Complex legislation – A simple explanation

When you work in business, keeping on top of all the different rules and regulations can be hard work. So Emirates NBD does what it can to help its customers understand how these changes may potentially impact their business.

In this page you’ll find a straight forward summary of sanctions and embargoes – how they work, your obligations as a business and the potential penalties for non-compliance.

While most businesses will rarely be affected by sanctions and embargoes, the consequences for breaking the rules can be severe. So, we suggest you study this page carefully and, if necessary, seek independent legal advice before entering into any agreements with international clients or their agents.

A sanction is a restriction that’s imposed on a country, a specific person, a legal entity or an organisation. They’re used by governments as a non-violent foreign policy tools to fight activities such as financial crime, human rights abuses, the sheltering of international criminals, nuclear weapons development and terrorism.

Sanctions affect financial institutions such as Emirates NBD (and their customers) because they place restrictions and controls on the movement of goods, services and money. We, and our customers, are legally bound to adhere to the sanctions imposed by relevant jurisdictions. Typical restrictions associated with sanctions include:

  • Prohibiting the transfer of funds to and/or from a sanction country and/or Specifically Designated Nationals (SDN);
  • Freezing the assets of a government, entity, individual or resident of a sanctioned country;
  • Prohibiting particular types of activities;
  • Imposing travel bans; and
  • Other financial and diplomatic restrictions.

An embargo is a unilateral or collective restriction on the import or export of goods, materials, capital or services into or from a specific country or group of countries. Embargoes are similar to sanctions and are legal barriers to trade.

We, and our customers, are legally bound to adhere to embargoes imposed by relevant jurisdictions.

Infringements of sanctions or embargoes, or dealing with Specially Designated Nationals (SDNs), are regarded as serious offences with severe penalties to match, including seizure of goods, significant fines and even imprisonment.

On top of these penalties, your transactions and your business could be placed at risk. For example, your payments may be confiscated or your funds frozen, restricting your cash flow. You may also be subject to increased due diligence by regulators, financial institutions and counter parties on your future transactions and activities, or financial institutions will refuse to handle transactions on behalf of your company. Ultimately, it’s highly likely that your business reputation will be significantly damaged.

If you or your business are involved in any of the following transactions, you may be at risk:

  • You make a payment to someone who is subject to sanctions or embargoes (SDN);
  • You make a payment to someone in a sanctioned country, even if their account is located in a non-sanctioned country.
  • The movement of funds or goods in your transaction involves a party that’s subject to sanctions or embargoes (for example airlines, banks, shipping vessels and ports).
  • Consider transhipment risks. Certain sanctions effect the classification and treatment of goods even if they are just transiting through a country subject to sanction e.g. goods transiting through Iran to a 3rd country destination would be treated as being of Iranian origin from a US sanctions compliance perspective.

Multilateral – These are sanctions adopted by more than one country against another country. They’re usually issued by super national bodies such as the United Nations Security Council (UNSC), the European Union or the Arab League; and

Autonomous – These are sanctions adopted by just one country against another country. They’re usually issued by domestic government bodies such as the USA Office of Foreign Asset and Control (OFAC), USA Bureau of Industry and Security (BIS);or Her Majesty’s Treasury (HMT) in the UK.

Sanctions aren’t always imposed on an entire country; there are various forms of targeted sanctions, including: SDN’s.

SDNs can be individuals or entities (such as financial institutions, companies, shipping vessels, ports or airlines) and they can be located anywhere in the world.

Authorities designate SDNs for a number of reasons. They may be linked to human rights abuses, nuclear proliferation, terrorism, narcotics trafficking, transnational criminal organisations, or they may support sanctioned regimes.

In most cases, entities that are beneficially owned by or significantly linked to an SDN will also be considered an SDN.

Common sanctioned goods and services range from weapons and rough diamonds to the provision of higher education in specific sciences. The sanctions cover the supply, sale, transfer, maintenance and provision of training in these goods or services, and include fund transfers related to their trade.

Arms embargoes prohibit the trade of certain weaponry as well as products and technologies that may normally be used for civilian purposes, but which have military applications (Dual Use Goods). These items commonly require an export trade licence.

The nature of sanctions and embargoes means that they’re subject to frequent and sometimes sudden changes. They can be imposed at any time and by any country, international organisation or super national body. In general, the effect is immediate.

All financial institutions have a duty to ensure that they comply with applicable sanction and embargo regimes. Failing to do so could lead to significant regulatory enforcement action, fines, criminal charges in the UAE or elsewhere, and serious reputation damage.

That’s why we, or our correspondent banks, may request certain information about the nature of your business transactions and activities, to determine whether you are complying with current sanction and embargo regimes.

If you don’t provide all of the information we request from you, we may not be able to complete your financial transaction and your relationship with our bank and the reputation with the wider financial community may be at risk.

Circumvention is the taking of specific action to avoid detection of the involvement of SDN or country subject to sanctions in a transaction. For example this would include

  • Omitting or altering details in payment instruction
  • Altering or misrepresenting the port of loading or port of discharge on a Bill of Lading or airports on an Air Waybill
  • Routing of payment via an unconnected 3rd party with no apparent commercial involvement or interest in the transaction
  • Providing fake or tampered documentation to support a transaction

All of the above activity would be seen as criminal / fraudulent activity and an offence under federal laws.

Emirates NBD, and our Correspondent Banks, takes an extremely strong stance where this activity is identified and will likely exit the client relationship and in most cases any other relationships with parties involved.

We, and also likely our Correspondent Banks, will also refuse to handle any further transactions involving such businesses.

UAE – The Central Bank of the UAE is responsible for the implementation of UN, Arab League and other sanctions and embargoes from time to time within the banking industry in the Emirates.

European Union – The EU implements sanctions and embargoes (commonly referred to as ‘restrictive measures’ in the EU) under the Common Foreign and Security Policy (CFSP) framework. EU sanctions and embargoes apply to all EU member states.

United Kingdom – Her Majesty’s Treasury (HMT) is responsible for the implementation and administration of international financial sanctions and embargoes in the UK.

United Nations – The United Nations Security Council (UNSC) is responsible for implementing United Nations sanctions and embargoes. All member countries under the Charter of the United Nations are obliged to abide by UN sanctions.

United States –The United States Treasury Office of Foreign Assets Control (OFAC) is principally responsible for administering and enforcing autonomous US sanctions and embargoes however the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce also administer a number of sanctions in additional to control and licencing of exports form the United States.

Emirates NBD has offices in a number of countries and regions including the UK and the EU and has foreign currency clearing relationships with many of the leading international banks, including in the USA. It must therefore comply with the regulations of their jurisdictions as well.

A sanction is a restriction that’s imposed on a country, a specific person, a legal entity or an organisation. They’re used by governments as a non-violent foreign policy tools to fight activities such as financial crime, human rights abuses, the sheltering of international criminals, nuclear weapons development and terrorism.

Sanctions affect financial institutions such as Emirates NBD (and their customers) because they place restrictions and controls on the movement of goods, services and money. We, and our customers, are legally bound to adhere to the sanctions imposed by relevant jurisdictions. Typical restrictions associated with sanctions include:

  • Prohibiting the transfer of funds to and/or from a sanction country and/or Specifically Designated Nationals (SDN);
  • Freezing the assets of a government, entity, individual or resident of a sanctioned country;
  • Prohibiting particular types of activities;
  • Imposing travel bans; and
  • Other financial and diplomatic restrictions.

An embargo is a unilateral or collective restriction on the import or export of goods, materials, capital or services into or from a specific country or group of countries. Embargoes are similar to sanctions and are legal barriers to trade.

We, and our customers, are legally bound to adhere to embargoes imposed by relevant jurisdictions.

Infringements of sanctions or embargoes, or dealing with Specially Designated Nationals (SDNs), are regarded as serious offences with severe penalties to match, including seizure of goods, significant fines and even imprisonment.

On top of these penalties, your transactions and your business could be placed at risk. For example, your payments may be confiscated or your funds frozen, restricting your cash flow. You may also be subject to increased due diligence by regulators, financial institutions and counter parties on your future transactions and activities, or financial institutions will refuse to handle transactions on behalf of your company. Ultimately, it’s highly likely that your business reputation will be significantly damaged.

If you or your business are involved in any of the following transactions, you may be at risk:

  • You make a payment to someone who is subject to sanctions or embargoes (SDN);
  • You make a payment to someone in a sanctioned country, even if their account is located in a non-sanctioned country.
  • The movement of funds or goods in your transaction involves a party that’s subject to sanctions or embargoes (for example airlines, banks, shipping vessels and ports).
  • Consider transhipment risks. Certain sanctions effect the classification and treatment of goods even if they are just transiting through a country subject to sanction e.g. goods transiting through Iran to a 3rd country destination would be treated as being of Iranian origin from a US sanctions compliance perspective.

Multilateral – These are sanctions adopted by more than one country against another country. They’re usually issued by super national bodies such as the United Nations Security Council (UNSC), the European Union or the Arab League; and

Autonomous – These are sanctions adopted by just one country against another country. They’re usually issued by domestic government bodies such as the USA Office of Foreign Asset and Control (OFAC), USA Bureau of Industry and Security (BIS);or Her Majesty’s Treasury (HMT) in the UK.

Sanctions aren’t always imposed on an entire country; there are various forms of targeted sanctions, including: SDN’s.

SDNs can be individuals or entities (such as financial institutions, companies, shipping vessels, ports or airlines) and they can be located anywhere in the world.

Authorities designate SDNs for a number of reasons. They may be linked to human rights abuses, nuclear proliferation, terrorism, narcotics trafficking, transnational criminal organisations, or they may support sanctioned regimes.

In most cases, entities that are beneficially owned by or significantly linked to an SDN will also be considered an SDN.

Common sanctioned goods and services range from weapons and rough diamonds to the provision of higher education in specific sciences. The sanctions cover the supply, sale, transfer, maintenance and provision of training in these goods or services, and include fund transfers related to their trade.

Arms embargoes prohibit the trade of certain weaponry as well as products and technologies that may normally be used for civilian purposes, but which have military applications (Dual Use Goods). These items commonly require an export trade licence.

The nature of sanctions and embargoes means that they’re subject to frequent and sometimes sudden changes. They can be imposed at any time and by any country, international organisation or super national body. In general, the effect is immediate.

All financial institutions have a duty to ensure that they comply with applicable sanction and embargo regimes. Failing to do so could lead to significant regulatory enforcement action, fines, criminal charges in the UAE or elsewhere, and serious reputation damage.

That’s why we, or our correspondent banks, may request certain information about the nature of your business transactions and activities, to determine whether you are complying with current sanction and embargo regimes.

If you don’t provide all of the information we request from you, we may not be able to complete your financial transaction and your relationship with our bank and the reputation with the wider financial community may be at risk.

Circumvention is the taking of specific action to avoid detection of the involvement of SDN or country subject to sanctions in a transaction. For example this would include

  • Omitting or altering details in payment instruction
  • Altering or misrepresenting the port of loading or port of discharge on a Bill of Lading or airports on an Air Waybill
  • Routing of payment via an unconnected 3rd party with no apparent commercial involvement or interest in the transaction
  • Providing fake or tampered documentation to support a transaction

All of the above activity would be seen as criminal / fraudulent activity and an offence under federal laws.

Emirates NBD, and our Correspondent Banks, takes an extremely strong stance where this activity is identified and will likely exit the client relationship and in most cases any other relationships with parties involved.

We, and also likely our Correspondent Banks, will also refuse to handle any further transactions involving such businesses.

UAE – The Central Bank of the UAE is responsible for the implementation of UN, Arab League and other sanctions and embargoes from time to time within the banking industry in the Emirates.

European Union – The EU implements sanctions and embargoes (commonly referred to as ‘restrictive measures’ in the EU) under the Common Foreign and Security Policy (CFSP) framework. EU sanctions and embargoes apply to all EU member states.

United Kingdom – Her Majesty’s Treasury (HMT) is responsible for the implementation and administration of international financial sanctions and embargoes in the UK.

United Nations – The United Nations Security Council (UNSC) is responsible for implementing United Nations sanctions and embargoes. All member countries under the Charter of the United Nations are obliged to abide by UN sanctions.

United States –The United States Treasury Office of Foreign Assets Control (OFAC) is principally responsible for administering and enforcing autonomous US sanctions and embargoes however the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce also administer a number of sanctions in additional to control and licencing of exports form the United States.

Emirates NBD has offices in a number of countries and regions including the UK and the EU and has foreign currency clearing relationships with many of the leading international banks, including in the USA. It must therefore comply with the regulations of their jurisdictions as well.

For more information

Please see links below and seek independent legal advice.

Should you still then have a specific transaction you would like Emirates NBD to consider assisting you with then please contact your Relationship Manager or Branch who will be able to direct your enquiry to the correct department.

We would ask that you do not agree to participate in a transaction which may have a connection to a sanctioned country / party without first speaking with the bank.

Important: The information contained in this guide is general in nature and has been prepared by Emirates NBD Bank PJSC (Emirates NBD) to assist its customers in understanding sanctions and embargoes. It is not intended to act as specific advice nor does it purport to contain all matters relevant to your circumstances or any specific transaction. As the environment relating to sanctions and embargoes is dynamic and evolving, this information is subject to change without notice. In particular, you should note that UAE specific circulars relating to economic sanctions may only be issued to concerned institutions and not issued generally to the public. We are not under any duty to update or correct it. All information should be checked for accuracy, currency and completeness. Current information can be obtained from

If sanctions or embargo issues arise in your business, we recommend that you obtain independent legal advice.

Website data correct at time of going to press.

 

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