RUSSIA: EDD - Enhanced Due Diligence
In 2014, as a response to actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (i.e. annexation of Crimea and armed conflict in Donbass), the EU has imposed sanctions against Russia (i.e. restrictive measures, in particular asset freezes and visa bans), listing some natural and legal persons from Russia and Ukraine (see, Council Regulation (EU)269/2014 and Council Decision 2014/145/CFSP).
The restrictive measures have been continually extended by subsequent EU Council regulations and decisions. Finally, before expiring on 15 March 2017, they have been extended for a further six months, and so on , and the listings of persons and entities has been amended (see, Council Decision 2017/445/CFSP and Council Implementing Regulation (EU)2017/437).
The EU has also imposed significant sectoral sanctions against Russia, extended until now, and measures limiting trade with and investment in Crimea and Sevastopol, extended until now (in July 2017 has been publicly disclosed a case of an illegal diversion from Russia to Crimea of four gas turbines produced by a German manufacturing group).
The EU has also imposed significant sectoral sanctions against Russia, extended until January 31st, 2018, and measures limiting trade with and investment in Crimea and Sevastopol, extended until June 23rd, 2018 (in July 2017 has been publicly disclosed a case of an illegal diversion from Russia to Crimea of four gas turbines produced by a German manufacturing group).
Furthermore, as said before, on August 2nd, 2017 the US President has signed into law n. 155-44 the bill titled “Countering America's Adversaries Through Sanctions Act”. The bill, among others, provides sanctions against Russia for activities concerning: (i) cyber security; (ii) crude oil projects; (iii) financial institutions; (iv) corruption; (v) human rights abuses; (vi) evasion of sanctions; (vii) transactions with Russian defense or intelligence sectors; (viii) export pipelines; (ix) privatization of state-owned assets by government officials; (x) arms transfers to Syria.
However, some persons/organisations continue to remain listed and subject to sanctions. Therefore, it is mandatory and prudent that EU economic operators follow a structured process of EDD (Enhanced Due Diligence), in order to carry out an adequate screening of their Iranian counterparts (so called KYC/Know-Your-Customer procedure), gathering and verifying all possible available information, including but not limited to: (i) “UBOs” (Ultimate Beneficial Owners), that directly or indirectly control the Iranian counterpart; (ii) and actual “DMs” (Decision Makers).
According to EU Council Regulations (EC)428/2009 (Dual Use) and (EU)833/2014 (Restrictive Measures Against Russia), under the jurisdiction of EU Member States any breach of certain prohibitions therein established is a criminal offence, in particular any breach relating to: (i) export of prohibited or unlicensed goods and services; (ii) asset freezing measures; (iii) transfers of funds; (iv) dealings with any listed person (individuals, companies, other organizations); (v) additional restrictive measures.
Against this background, EU exporters (or Non-EU organizations dealing with EU) who fail - because of lack or inadequacy of internal controls and KYC procedures - to fully comply with EDD requirements and proactively align with EU government-sponsored compliance initiatives, can find themselves seriously exposed to legal and reputational risks, with a potential disruptive economic and financial impact on their business continuity.
Therefore, all relevant business relationships and transactions with natural and legal persons from Russia and Ukraine must undergo an EDD/KYC process, which EU economic and financial operators have to carry out in compliance with the rules set out both at EU and national level.
Given the complex and fast-changing regulatory framework above outlined, EIFEC has decided to implement a specific Export Compliance Enhanced Due Diligence program (EDD RUSSIA) in order to incentivize all interested economic and financial operators to proactively and fully comply with the applicable EU directives and regulations, national laws and regulations (including US) as well as with the appropriate best practices, in any relevant business relationship and transaction with natural and legal persons from Russia.