On the face of it, the move is sound and offers a "tangible step [towards] reaffirming the EU's global lead on human rights", according to Mr Borrell. In reality, the move is most notable because it demonstrates how the US and EU sanctions frameworks can be so disjointed (a point touched on in a previous post here). Although the Magnitsky Act applies globally, the EU has been noticeably absent from developing a sanctions regime that has human rights abuses at its core. On that basis, it is hard to see how the EU playing catch up really demonstrates its leadership role in this area. On a practical level, too, there is a need for the US and EU to act in unison when forming important decisions on foreign policy and sanctions, and so this is a welcome step which should provide greater certainty to European businesses looking to operate with certain individuals.
The new regime has the potential to become an effective tool because it will fill a gap left by the existing sanctions framework which is country-oriented. Because in reality some crimes cannot be attributed to a country, it is important that individuals can be held to account. This framework will provide for that by allowing the EU to specifically target individuals. While it is desirable to send diplomatic signals on a country-to-country level, the ability to issue targeted and more responsive sanctions against relevant individuals could prove effective.
Once implemented, this new framework will be another compliance step to which companies will need to be aware when dealing with certain individuals. While this may appear to be an added cost to those businesses, the reality is that the more joined-up EU and US approach on offer should simplify compliance costs. To speak to our sanctions team about how this development may affect your business and what steps you can take to mitigate its impact, please contact Andrew Hood.
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