It’s time to be serious about sanctions
By Roger Symes, Director, Marine Debt Management
As the world becomes a more difficult and dangerous place, ship suppliers have typically adopted the age-old slogan, “Keep Calm and Carry On”. Despite increased delays in receiving goods and higher costs, ISSA members are committed to meeting their customers’ needs.
In the urge to “get the job done”, regardless of obstacles, the issue of sanctions has been given insufficient thought by some. Thinking sanctions were irrelevant to their businesses has left them out of pocket. Therefore, as the scope of sanctions is certain to increase in 2025, it is worth evaluating whether it’s time to amend your business practices. Sanctions are defined as a variety of measures imposed by one country or group of countries (for example, those in the European Union) against another country, organisation, or individual to encourage a change in behavior, punish non-compliance with international norms or laws, or achieve specific policy objectives.
We often hear, “Sanctions don’t work”! The argument is that, since a particular trade continues after the introduction of sanctions, they serve no purpose. That is to misunderstand the role of sanctions. Their job is often to allow business to continue, whilst making it more difficult and, consequently, more costly. Sanctions can be imposed incrementally, with their scope being widened as restrictions are tightened. At the same time, particular goods and services may be excluded from sanctions if their uninterrupted supply is thought beneficial. So, what are the implications for ship suppliers? Naturally, all ISSA members are keen to comply with the laws of the countries in which they operate. However, suppliers everywhere should also keep up to date on the sanctions imposed by the United Kingdom, the United States and the European Union. These three can and do impose secondary sanctions on foreign individuals and organisations they consider facilitate the breaching of sanctions. Larger, multi-national ship suppliers usually have procedures in place to assess sanctions risk as part of their KYC (Know Your Customer) and credit risk procedures. Many others may think the issue is not relevant to them, whilst some believe sanctions present opportunities to secure business against reduced competition.
As the world becomes a more difficult and dangerous place, ship suppliers have typically adopted the age-old slogan, “Keep Calm and Carry On”.
It is easy to sympathise with someone who argues, no one else has the right to say with whom they can do business. It is also true to say that we are not aware of any ship supply company that has been directly sanctioned, either by its own government or another. That said, there are two reasons for extra vigilance by all. The first is that customers who are sanctioned tend to go out of business pretty quickly, often leaving debts unpaid. So, it is important to be alert to customers that are at risk of being sanctioned.
Secondly, there is no one more fearful of the imposition of sanctions than the banks. Almost all need to transact business in US Dollars via the United States. For a bank to be sanctioned would have a disastrous effect on it and its customers. This means banks are increasing their KYC checks and will rush to close the accounts of customers if ever there is a hint they might be trading with entities with the potential to be sanctioned. Sanctions are with us for the long-term. Every business needs to take account of them.
Tweet
Connect
