The EU's Fifth Money Laundering Directive will regulate all UK art market transactions above a threshold of €10,000 from January 2020, adding a further layer of compliance on top of sanctions legislation that already restricts dealing with certain entities. Helen Mulcahy, Francesca Titus and Vivien Davies consider the impact of the new rules and discuss how those trading in the art market can prepare for increased scrutiny.
International sanctions are a constant compliance challenge for companies across the world and the scope and complexity of these regimes continues to grow.
Economic, financial, trade and travel restrictions are imposed by a variety of governments, the EU and the UN and have a long reach – targeting governments, companies and individuals – and can carry severe reputational, criminal, regulatory and financial risk. In the UK alone, for example, the Office of Financial Sanctions Implementation (OFSI) has had the power to issue monetary penalties for financial sanctions breaches of up to £1m or, if higher, 50% of the estimated value of the breach.
Sanctions, export controls and trade restrictions are complex areas that can be triggered by several factors including the nature and origin of the items involved, the intended final use of an item, the destination country, the persons involved in the transaction, the sector in which the business operates, the currency of the transaction. They can capture those who provide financial assistance in particular circumstances or technical assistance for sanctioned goods.
If you are the target of sanctions or your business operates in a country or a specific industry sector on which sanctions or trade restrictions have been imposed, or intends to move into such a territory or into a new sector, it is essential to understand the potential impact of the global sanctions and export control regimes. We are experienced in advising businesses on how to navigate these regimes and how to ensure compliance and avoid liability for sanctions offences.
We have acted for a number of persons who have been designated as targets of financial sanctions, including individuals and commercial entities. We have not only assisted clients in dealing with the relevant licensing authorities in the UK and overseas but have also pursued court applications in the EU courts to annul sanctions designations and sought the voluntary removal of persons and commercial entities from sanctions lists through representations to the relevant authorities. We have successfully removed a number of clients from sanctions lists.
Fieldfisher's experienced sanctions team includes lawyers who have negotiated and drafted EU and UN sanctions regimes in Government; worked with companies to help them understand the legal intricacies of key sanctions and export control regimes and helped them to audit their business and devise firm-wide compliance programmes to ensure a commercially-focussed solution to these regulatory demands; and engaged with the relevant licensing or regulatory authorities such as OFSI, OFAC, the EU Commission and other authorities across the EU, including supporting companies in making a voluntary disclosure.
This experience, coupled with our offices throughout Europe and close contacts with experts on US sanctions, makes us ideally placed to advise on both the contentious and non-contentious aspects of sanctions and trade restrictions, whether in the context of measures imposed by the UK, EU, US or UN. Our expertise is supported by our in-depth understanding of our focus sectors including finance and financial services, technology, oil and gas and the wider energy and natural resources industry.
Understanding your business is central to our approach and our close contact with the relevant authorities is invaluable in guiding you through any given trade matter. With extensive experience working with regulators, our lawyers know what works and what doesn’t. We have our finger on the pulse of impending changes to sanctions regimes which have been announced but not yet introduced. Therefore we are able to advise our clients how to take advantage lawfully of new opportunities for trade when nations are brought back into the fold of the international community.
Notable Deals and Highlights
- Successfully delisted individuals and companies from the EU, Canadian and Swiss sanctions;
- Represented a number of clients on challenges to sanctions listings;
- Advised international energy businesses on the Iran sanctions and on the impact of various EU, UK and US sanctions regimes on their business;
- Assisted a major European banking institution on EU and US sanctions compliance and general sanctions policy;
- Advised a global medical device company on the Iran sanctions and on encryption controls;
- Advised a worldwide logistics company on the unauthorised export of military items;
- Advised a corporate and fiduciary services provider on sanctions compliance;
- Advised a major Russian financial institution on compliance with international sanctions (value of transactions in excess of US$3 billion);
- Advised a major mobile network operator on several sanctions regimes and their application to telecommunication devices;
- Assisted companies in various sectors with export control and sanctions compliance matters including in-house training and contacts with the competent authorities;
- Assisted manufacturers and suppliers of advanced technology with sanctions compliance, product classification and the preparation of an export control manual;
- Advised chemical companies on sanctions regimes and product classification;
- Advised a manufacturing firm on its divestment of assets in conjunction with international sanctions compliance;
- Advised a worldwide travel company on the impact of sanctions in Cuba, Burman and Iran.