Ashley Craig, co-chair of the International Trade Group of Venable LLP, explains the content of a new communication from three government agencies, cracking down on violators of U.S. sanctions and export controls targeting Russia and Belarus.
The “Tri-Seal Compliance Note” from the Departments of Justice, Treasury and Commerce is similar to warnings issued by government agencies in the past, especially one in May of 2020 targeting the maritime sector. This one, however, was intended to remind exporters about the seriousness of the sanctions arising from Russia’s invasion of Ukraine, a conflict that doesn’t appear close to resolution.
In addition, there’s been a proliferation of “bad actors” over the past few months attempting to undermine or circumvent the sanctions through “a litany of different means,” Craig says. “This provides notice that the government is aware, and that you’d better be mindful.
The three agencies stressed the need for exporters to exercise “heightened caution and additional due diligence.” What it comes down to, Craig says, is that the onus is on the individual company to meet the mandate for compliance. “Willful ignorance is not going to help you.”
The mantra is “know your customer.” It’s vital that exporters properly vet the parties to whom they’re shipping, although that becomes more difficult to do if the goods in question then pass through multiple hands. How far down the chain must the seller go? “The U.S. government would say, as deep as you need to go,” says Craig. That said, it becomes extremely difficult to trace the provenance of exported goods beyond a certain point.
“You know who your direct customer is,” he says. “If there’s reason to believe that there’s going to be a resale, you’ve got to go one step beyond and ask your customer, ‘Who are you dealing with?’”
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