Brussels, 7 September 2023
The Commission has today published a guidance note addressed to European operators to help them identify, assess, and understand the possible risks of sanctions circumvention – and how to avoid it. This guidance note aims at providing a general overview of what EU operators need to do when conducting due diligence in their work, as required by EU law.
Under EU law, EU operators have an obligation to carry out due diligence when trading with third countries to ensure that their business partners are not circumventing EU sanctions. Today’s note is intended as a practical guide outlining the successive steps to be applied by EU operators when conducting strategic risk assessments. This should mitigate as much as possible their exposure to sanctions circumvention schemes. In addition, for the European operators most exposed to this risk, it sets out guidelines for implementing enhanced due diligence, including by providing best practices with regard to the assessment of business partners, transactions and goods.
The guidance also provides a list of circumvention red flags. These red flags relate to business partners and customers and are indicators designed to alert EU operators to possible risks when they enter into a commercial relationship with a new trading partner.
The European Union has imposed unprecedented restrictive measures in response to Russia’s war against Ukraine and the complicity of Belarus in it. Faced with the scale of these sanctions, Russia has deployed increasingly elaborate schemes and techniques to circumvent these measures. By using such complex methods Russia is attempting to acquire the goods its military industrial complex desperately needs to continue pursuing its war of aggression against the people of Ukraine.
Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said:
“EU support for Ukraine is steadfast. EU sanctions are having a real impact on Russia’s ability to wage war, and therefore Russia is desperately searching for ways to circumvent them. The lengths that Russia will go to get around our restrictions are increasingly complex and opaque. This practical guidance will help EU exporters spot red flags and reduce the risk of sanctions evasion.”
The guidance note is available online.
Source – EU Commission