The American Conference Institute’s annual conference on US Economic Sanctions Enforcement and Compliance in Washington, DC returned in-person in May 2022, with a broad mix of representatives from the US, EU and UK governments and sanctions practitioners from law firms and corporate organisations. Russia was central to most of the discussions, given the ongoing impacts of the conflict in Ukraine. We share five of our takeaways from the event.
- Russia sanctions will remain in place and are the main priority of Western governments. There was consensus from US, EU and UK officials that sanctions against Russia will remain while the conflict with Ukraine continues, and that the sanctions regime will expand and tighten in response to the pattern of violence. There was one possible trade-off suggested for an easing of sanctions against Russia: if Russia implemented a peace treaty, then they could be given access to some of the foreign exchange reserves that were restricted in response to the start of the conflict. However, this suggestion was an outlier; officials from either side of the Atlantic did not suggest much scope for an easing of sanctions or optimism about a peace treaty, and much of the discussion rather focused on how sanctions could be strengthened and Russia’s circumvention of them avoided. In an indication of the political mood, US government officials implied – but did not say outright – that any reversal of sanctions – even in conditions of peace – were unlikely in the absence of broader political change in the relationship with Russia.
- However, there are other important priorities.The US’s – and to an extent the EU’s and the UK’s – sanctions priorities are consistent with recent years: counter-terrorism, human rights and corruption, the alleged misuse of the cyber domain and digital assets, and country-specific regimes that many sanctions practitioners are accustomed to (China, Cuba, DPRK, Iran, Myanmar and Venezuela). The intersection of cyber security issues with sanctioned countries and actors, and the associated compliance challenges, are a priority for these governments, with US officials being the most forthright about cyber and digital issues, stating that the US wants to be the global leader in digital assets.
- Collaboration in and with the EU.There was consensus that the EU has changed its approach to sanctions, making them a more integral part of its foreign policy and collective security. However, the tensions between member states will hamper the implementation of additional measures against Russia in the coming months and on other foreign policy challenges in the future. The EU and the UK did not appear to be where the US now is with its use of sanctions, in that the US uses sanctions as a central foreign policy tool to promote its economic and technological competitiveness and supremacy (including in the digital domain). Nonetheless, all government representatives talked of the unprecedented nature of their diplomacy and collaboration towards the Russia sanctions since February. The designation of Chelsea FC due to the imposition of sanctions on its owner Roman Abramovich was raised as a unique example of collaboration on joint UK and EU licences to allow Chelsea’s away match against Real Madrid in the men’s Champions League quarter finals to take place in April.
- Humanitarian considerations. The impact of sanctions on normal people and sanctions’ role in generating – and in some cases exacerbating – humanitarian problems was widely acknowledged by government and the private sector, particularly in the provision of food and healthcare. The US, EU and UK governments sought to address these criticisms by encouraging the private sector to engage with them about these issues as they arise, and to ensure that they consult the various advisories they have produced on these themes. These humanitarian considerations also appeared in discussions about how to approach licensing questions. Private practice lawyers emphasised that licences are easier to obtain from sanctions enforcement agencies if they are framed in terms of the human impact of permitting the business activity and the consistency of these outcomes with governments’ foreign policy goals (rather than the financial impact of sanctions on companies).
- Law enforcement and sanctions.There was discussion among US government representatives and private practice layers about sanctions perhaps eclipsing corruption as a central focus for US law enforcement agencies. The Office of Foreign Assets Control (OFAC), the US’s sanctions enforcement agency, has appointed a new head of engagement with law enforcement agencies, which appears to be indicative of this shift. The increasing use of sanctions designations against officials and criminals associated with corruption, and the nexus between some of the justification for sanctions against Russia with corruption, are drawing corruption – which has typically been the domain of the Department of Justice – and sanctions investigations – which have typically but not exclusively been the domain of the Department of Treasury – more closely together.
Control Risks published its 2022 global outlook for sanctions in March. You can download a copy of the report by clicking here.