Sanctions Legislation and Compliance: How Do You Protect Your International Business?
Doing business internationally offers excellent opportunities, but also involves complex legislation. As an internationally operating business, you will have noticed that the rules surrounding trade compliance are becoming increasingly strict. Banks and customs authorities scrutinise every transaction you make. Compliance with sanctions legislation is therefore no longer optional, but an absolute necessity for sound business operations.
As a Company Law lawyer, I see many entrepreneurs assume that simply “doing business properly” is enough. Until a bank suddenly blocks a crucial transaction because compliance has not been embedded in the company’s business processes. Compliance with sanctions legislation requires an active approach. In this article, I explain how you can manage risks and maintain control over your international trade.
The purpose of a compliance policy for international businesses
Compliance simply means that your business operates in accordance with applicable laws and regulations, internal standards and ethical values. In my Company Law practice, I find that a sound compliance policy is your most important safeguard against unexpected legal problems. It helps you identify risks at an early stage and take the appropriate measures immediately.
When you do business across borders, you can quickly encounter specific compliance risks. These may include export restrictions, requirements under the Dutch Money Laundering and Terrorist Financing (Prevention) Act (Wwft), or stricter customs inspections. If your processes are not in order, you risk substantial fines and serious reputational damage. A proactive approach helps ensure that you act with integrity and remain a reliable partner for external authorities and institutions.
The impact of current sanctions legislation on your business
The Dutch Sanctions Act 1977 (Sanctiewet 1977) provides the legal basis for implementing international sanctions measures. It is advisable to regularly check the websites of the Netherlands Enterprise Agency (RVO) or Sanctioncheck for the latest information on situations, countries, services and goods that are subject to restrictions. This framework of rules prohibits trade with certain sanctioned countries, organisations or individuals. Government authorities and regulators expect you to know exactly with whom you are doing business, whether directly or indirectly.
Every business operating internationally must check the relevant sanctions lists before entering into a transaction. This applies not only to Dutch sanctions lists, but often also to the broader EU sanctions lists or international sanctions lists. Even an inadvertent breach of these rules can have far-reaching consequences for the continuity of your business.
How do you set up effective sanctions screening?
Manually checking every new customer or supplier is impractical and increases the risk of human error. I therefore recommend making systematic sanctions screening a fixed part of your onboarding and monitoring processes. This means using software or systems that automatically check whether a business relationship appears on a current sanctions list.
Effective screening goes beyond checking a company name. You should also investigate the underlying owners, including ultimate beneficial owners (UBOs), as well as the final destination of your goods. This is particularly important in export compliance: a product itself may be permitted, while the end user is subject to sanctions. By documenting these checks in your sanctions policy, you demonstrate that you are taking your responsibilities seriously.
Immediate action in the event of questions or blocks imposed by banks and customs authorities
In practice, I see larger companies in particular, including businesses with turnovers in the millions, regularly encounter significant obstacles. Banks apply zero-tolerance policies and may freeze accounts or payments as soon as there is even a minor suspicion of a compliance risk. Customs authorities may also hold shipments for extended periods while carrying out additional checks.
In practice, a strategic and diplomatic approach towards regulators and banks is often the quickest route to a solution. Because of my own background and experience at an international investment bank, I understand how these institutions operate and assess risk. Immediately pursuing legal proceedings is often ineffective. In amicable resolution processes, I instead focus on reaching practical and clear arrangements with banks and customs authorities. This helps restore trust and resolve the blockage as quickly as possible.
How do you prevent sanctions risks in international trade?
Establishing a robust policy for compliance with sanctions legislation can sometimes feel like navigating a maze. Nevertheless, it protects your business against costly mistakes, disrupted logistics and legal claims. Do not wait until the bank blocks your first transaction, as statutory deadlines for responding are often short and strict.
Would you like your current processes reviewed, or do you need immediate assistance with a dispute involving customs authorities or your bank? I would be pleased to help you establish a robust trade compliance framework. Contact me today for strategic advice. Together, we can help ensure that your international trade can continue safely and in accordance with the applicable rules.
Frequently Asked Questions
about Compliance
What should I do if my bank blocks a transaction because of sanctions?
If a bank blocks a transaction because of a potential compliance risk, you should immediately provide the underlying documentation and the results of your sanctions screening in order to rebut the suspicion. Need assistance? At RWV Advocaten, we help you restore the bank’s confidence quickly through a transparent and diplomatic approach.
What are dual-use goods and when do I need an export licence?
Dual-use goods are products, software or technologies that can be used for both civilian and military purposes. In the context of export compliance, you are required to apply for an export licence in accordance with Dutch government guidelines when exporting such goods to countries outside the EU.
What are the consequences if my company breaches sanctions legislation?
A breach of the Dutch Sanctions Act 1977 constitutes an economic offence. This may result in fines amounting to millions of euros, custodial sentences for directors and reputational damage, potentially causing banks to terminate their relationship with your business.
What is the difference between the Dutch Sanctions Act 1977 and EU sanctions regulations?
The Dutch Sanctions Act 1977 is the national framework legislation that gives the Dutch authorities powers to implement and enforce international sanctions domestically. EU sanctions regulations, by contrast, are directly applicable in all EU Member States. Businesses must comply with both regulatory frameworks in order to remain fully compliant.
What steps should I take if my company has inadvertently breached sanctions legislation?
Report the inadvertent breach of sanctions legislation promptly by making a voluntary disclosure to the competent supervisory authority, such as the Dutch Customs Administration. Engage an expert to assist strategically with the disclosure; doing so demonstrates your willingness to cooperate and may significantly reduce the likelihood of the maximum penalties being imposed.
