Sanctions

A sanctions regime is set by law or by a decision of a body such as the United Nations Security Council, the EU, or a national government. It names who is targeted and what is banned. The tools include asset freezes, bans on providing funds, limits on exports and imports, restrictions on particular sectors, arms embargoes and travel bans. Some regimes cover an entire country; others hit a list of named people and entities. Governments choose them to change behaviour, signal disapproval or cut off the resources of a target, often as a step short of force. Firms comply by screening customers and payments, blocking or freezing where required, reporting to authorities, and refusing prohibited business. Penalties for breach can include heavy fines and prison. The word is also used for penalties in other fields, but here it means policy measures against an outside target. Sanctions law reaches every firm that handles money or goods, whatever its industry.

A manufacturer of industrial pumps receives an enquiry from a new overseas distributor. Its compliance team checks whether the distributor, its owners or the destination country are covered by any regime that binds the firm. The destination is under a sectoral restriction on certain equipment. The team classifies the pumps, finds them restricted, and declines the order.