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A special report from WorldECR A WoRld A special report from of ChAngEWorldECR A World of Change CONTENTS 3 SAfE hAndS nEEdEd More and increasingly complex sanctions. New technology and new controls to go with them. Geopolitical upheaval. It’s all in a day’s work for the export control compliance professional. elcome to this special report 11 MAPPIng ThE ChAngES W from WorldECR, the journal of While Iran and Russia continued to provide the lion’s share of work for export controls and sanctions. sanctions lawyers in 2018, it is the divergence of policy between the US In ‘A World of Change’, we and the rest of the world that is creating some of the more complex consider the current climate in compliance challenges for international businesses. international economic sanctions and export control – the policy matters, 34 ThE fUTURE WIll BE EXPoRT- the regulatory developments, the ConTRollEd impact for industry – in discussion Technology is driving export controls and keeping up with new with practitioners in the field and, developments is perhaps the greatest challenge export control with their assistance, cast an eye to compliance practitioners will face in the coming years. the coming years and what we can expect them to bring. The ‘Insight’ articles, provided by INSIGHT recognised leaders in the field, offer an expert – and interesting – ‘take’ on 7 The US government is trying to figure it out. You should, too. some of the key talking points and By David L. Hall, Wiggin and Dana challenges facing companies and compliance professionals today. 8 Growing divergences between US and EU sanctions: the impact Against a backdrop of developing of a fast-moving sanctions landscape on compliance efforts technology and increasingly complex By Jason Hungerford, Tamer Soliman, Paulette Vander Schueren and controls, and as we head into 2019, Edouard Gergondet, Mayer Brown it’s clear that sanctions and export control professionals have never been 9 The Global Magnitsky Act: Sanctions in response to in such demand. international crises I hope you enjoy this special By Ryan Fayhee, Alan Kashdan, Olivier Dorgans, Tyler Grove and Clothilde report. Humbert, Hughes Hubbard & Reed 10 ‘A key market for our company has just had sanctions imposed Tom Blass, Editor, WorldECR on it. What do we do?’ December 2018 By Daniel Martin and Anthony Woolich, HFW 25 Economic sanctions: foreign policy tool or signal? By Sue Millar and Stephen Ashley, Stephenson Harwood 26 Time to get to know the UK’s Sanctions and Anti-Money Laundering Act 2018 By Guy Martin, Carter-Ruck 27 The EU Blocking Regulation: compliance programmes for US and EU companies By Satish M. Kini, Jane Shvets, Konstantin Bureiko and Tom Cornell, Debevoise & Plimpton 28 Coping with evolving US sanctions on Russia By Alexandra Baj and Brian Egan, Steptoe & Johnson 29 The future of Iran sanctions: looking to the past By Barbara Linney, Miller & Chevalier 30 Iran: sanctions issues facing the international shipping and insurance industries By Michelle Linderman and Cari Stinebower, Crowell & Moring 31 Global Magnitsky sanctions and expanding anti-corruption and human rights enforcement authority By Peter G. Feldman, Paul M. Lalonde, Nadiya Nychay and Jason M. Silverman, with the assistance of Larysa Workewych, Dentons 2 WorldECR l A World of Change www.worldecr.com SAfE hAndS nEEdEd More and increasingly complex sanctions. New technology and new controls to go with them. Geopolitical upheaval. It’s all in a day’s work for the export control compliance professional. he perennial gift of uncertainty – Meng Wanzhou for her role in alleged Whatever else may be its fallout, regularly received from the world Iran sanctions violations. The United further sanctions are certainly a T by trade compliance managers – States is seeking her extradition – likelihood – and quite possibly other possesses the oxymoronic qualities of China has responded with the threat of domestic trouble. both the unpredictable and the ‘consequences’ for both of the other In the United Kingdom, prime unexpected, and this year’s variant is a countries involved. minister Theresa May hangs on to her real corker. In the United States itself, the political life by a thread, a victim, as As at time of writing, Chinese-US Special Counsel investigation into was her predecessor, of the exercise in (and Canadian) relations have been Russian interference into the 2016 democracy made manifest in a vote on dragged to an all-time low by the arrest presidential election appears to be Britain’s continued membership of the at Vancouver airport of Huawei CFO reaching some kind of denouement. European Union. 3 WorldECR l A World of Change www.worldecr.com A World of Change Turning to the Middle East, western year, FIRRMA, and ECA and having to ownership of counterparties, and lawmakers – if not those necessarily navigate the wave of change they will ensuring that the company’s European with executive power – are breaking bring across the Atlantic. businesses had exited the Iranian with a long tradition of only muffled Clearly, each company, depending market within the required time criticism of Saudi Arabian foreign and on what it manufactures or exports, frames, the conservative stance of domestic policy. where it exports to and how, has banks, ‘most of which have internal Latin America, also, looks set for concerns that are pertinent to itself, policies which go above and beyond the disruption: Nicaraguan politicians now and its sector: the new Swedish regulations themselves, meant that the join counterparts in Venezuela on democracy criterion is less likely to banks were policing transactions, even where no export licence is required and where there is no US nexus.’ ‘Merely screening doesn’t cut it. You need As to the ever-increasing need to to be able to identify ownership of all have a grasp of all the players in the parties, even the ownership of the airport supply chain, she comments: ‘Merely your forwarding agent is proposing to screening doesn’t cut it. You need to be ship your product through!’ able to identify ownership of all parties, even the ownership of the airport your Julie Cooper, Spectris forwarding agent is proposing to ship your product through!’ She notes, for example, the fact that several Russian sanctions lists, and observers say there keep awake a Kentucky-based, dual- airports, frequently used for freight, could be more to come – especially use widget manufacturer than it is are owned by Russian oligarchs Oleg since the ambit of sanctions legislation Bjorn Uggla. Deripaska and Viktor Vekselberg. has now clearly been expanded and But generally speaking, broad, ‘Those players that are able to extended to grasp within its ambit the sweeping regulatory change impacts provide a “one stop shop” for all corrupt and the cruel. most globally-interfacing companies, screening/ownership requirements, ‘We have to deal with the world as it in some way or another. Thus, the head fully automated and able to link to any is, and how we imagine it will be. That’s of compliance at an oilfield services ERP system, meeting both export the best we can do,’ is what one company describes CAATSA, the US control and ethics needs, are the ones industry compliance old-timer told withdrawal from the JCPOA, and the that are most likely to stay in the game,’ WorldECR. Many men and women ongoing trade dispute between the she says. have concluded as much over the United States and China as ‘the main millennia, and doubtless many more challenges’ confronting his sector. Back to the future shall. There has not, he says, been sufficient Trade compliance works on several But in the very particular space of government guidance – particularly as registers – and at different paces. export controls, imagining how the regards the applicability of CAATSA There is the coalface, firefighting world will be is set to become – or has and the reimposition of Iran sanctions aspect – responding quickly to changes become – part of the job description. – which leaves him wondering whether in political happenstance: blockades the goal of lawmakers ‘is potentially to and blocking statutes, coups and crises, Put it on the agenda sustain uncertainty and lack of clarity outright outrage, or unilateral U-turns. Asked by WorldECR as to which issues to optimise their flexibility.’ This aspect, is, arguably, the slice of the are keeping his in-tray warm, Bjorn Julie Cooper, export control pie that industry finds most Uggla, vice president, head of export compliance manager for a UK company confounding. compliance for Saab AB mentions: manufacturing specialised measuring As our oil and gas sector compliance instruments (Spectris), also points the leader says: ‘We live in a world shaped l the increasing complexity of finger at the Russia and Iran sanctions by rapid and often unpredictable existing sanctions regimes as a major preoccupation for a changes in geopolitics. It is not obvious l new Swedish military export control company such as hers. In addition to that currently available due diligence legislation – introducing a criterion identifying the potential Russian tools are sufficiently sophisticated or under which the democratic status reactive enough to provide suitable of the recipient country will be a key risk-mitigation support.’ factor for granting a licence And there are the quotidian tasks of l the implications of the General Data training, record keeping, and other Protection Regulation on screening requirements of an internal processes compliance plan (which itself must be l the possible consequences of kept up to date), ensuring commitment BREXIT to compliance from ‘the top’, l proposed changes in the EU dual- performance reviews, and maintaining use regulation physical security. l the challenge of complying with There’s no doubt that automation cloud controls… has changed / is changing / will continue to change the face of trade In other words, that’s a full plate – compliance – but it will remain a even before adding the acronyms of the uniquely human discipline.

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