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Growing number of sanctions presses the importance of a sanctions compliance program

The United States has the most active and extensive sanctions program in the world. Not only does the U.S. target multiple countries, but individuals — no matter where they live — are also targeted through regulations, such as the Global Magnitsky Human Rights Accountability Act. The U.S. also divides its sanctions program into primary and secondary sanctions, the latter being an often ambiguously defined extraterritorial prohibition against U.S. companies and institutions (e.g., financial and logistics firms) doing business with a non-U.S. company that engages in activities with sanctioned entities.

The result is a serious risk for both compliance officers dealing in international transactions and supply chain managers overseeing global value chains. Keeping track of Specially Designated Nationals (SDNs) and sanctioned entities is very difficult, especially given the fact that both SDNs and sanctioned nation-states work very hard to mask their business transactions via shell companies and complicated accounting and payment procedures.

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