An integrated sanctions implementation system for corporations

Implementation of the UN’s proliferation sanctions and its extraordinarily complex measures requires corporations, regardless whether internationally active or nor, to institute particularly vigorous practices.

In general, internationally active companies and business leaders bear the costs of sanctions implementation in at least one of four ways:

  1. Compliance and due diligence provisions
  2. Lobbying and marketing to prevent the imposition of specific sanctions
  3. Loss of revenue and profits when sanctions affect a company’s vital economic sector
  4. Cost of fines, impaired reputation, and corrections in internal leadership, organizational and decision-making processes for companies designated for sanctions

While most entrepreneurs and investors are not confused about the potential costs of sanctions, very few have a sense of the potential benefits. Higher awareness should be fostered to potential benefits of UN sanctions:

  1. Establish global standards for business in conflict and post-conflict regions;
  2. Create the need for developing and offering due diligence and compliance tools, mechanisms and procedures;
  3. Convert a conflict state into a new market with legitimate business opportunities;
  4. Stimulate inevitable billion dollar investments by the international community to rebuild a converted former conflict state.
Regardless of the cost-benefit considerations, compliance with UN sanctions is a legal requirement that must be met by any company in the world. It is not only international law, but the possibility of criminal and civil prosecution that makes compliance a self-evident imperative for responsible companies.

 

Senior managers and compliance officers must also observe their fiduciary responsibilities to their shareholders who expect their companies to avoid compliance failures and the associated costly liabilities that diminish shareholder value.

The challenge for any company is to strike an appropriate balance between the cost of compliance budgets while maximizing company-wide compliance and precautions.