Legal opinions
Is it Possible to Cooperate with a Company Included into the Sanction List?
17 March 2020
The lawyers provided a foreign Client with an opinion regarding the possibility of working with a banking institution of the Russian Federation included into the sanction list. Regulatory acts were analyzed, risks and consequences were assessed.
A large international company has organized a legal entity in the Russian Federation. Subsequently, the company had a question related to the fact that the bank, whose services were used by the Russian legal entity, was included in the US sanction lists, in particular, in the sectoral sanctions list of the Department of Treasury's Office of Foreign Assets Control ("OFAC"). Refusal to cooperate with this bank could affect the entire international structure of the corporation and make its own adjustments to the company's business (not only in the Russian Federation) with possible negative consequences.
Since it was necessary to continue cooperation with this particular banking institution, the client requested BBNP specialists to analyze the bank's sanction regime and possible risks in case that the cooperation was continued.
BBNP lawyers investigated the relevant regulatory acts of the US government authorities and the practice of application thereof in terms of the impact on persons who cooperate in one way or another with organizations under sanctions.
The subjects who are obliged to comply with these rules were determined, the prohibitory rules themselves were identified, indicating specific actions that the OFAC considered as violations of the sanction acts.
Our experts determined the scope of the powers of the government agencies, possible consequences for the Russian legal entity and other members of the international group of companies when qualifying the client's actions as violating these rules; and the possibility for the client to work with this bank was legally justified.
Having receiving a detailed consultation, the company's representatives, confident that there were no risks, decided to continue profitable cooperation with the banking institution.
Case Description
A large international company has organized a legal entity in the Russian Federation. Subsequently, the company had a question related to the fact that the bank, whose services were used by the Russian legal entity, was included in the US sanction lists, in particular, in the sectoral sanctions list of the Department of Treasury's Office of Foreign Assets Control ("OFAC"). Refusal to cooperate with this bank could affect the entire international structure of the corporation and make its own adjustments to the company's business (not only in the Russian Federation) with possible negative consequences.
Since it was necessary to continue cooperation with this particular banking institution, the client requested BBNP specialists to analyze the bank's sanction regime and possible risks in case that the cooperation was continued.
BBNP lawyers investigated the relevant regulatory acts of the US government authorities and the practice of application thereof in terms of the impact on persons who cooperate in one way or another with organizations under sanctions.
The subjects who are obliged to comply with these rules were determined, the prohibitory rules themselves were identified, indicating specific actions that the OFAC considered as violations of the sanction acts.
Our experts determined the scope of the powers of the government agencies, possible consequences for the Russian legal entity and other members of the international group of companies when qualifying the client's actions as violating these rules; and the possibility for the client to work with this bank was legally justified.
Result
Having receiving a detailed consultation, the company's representatives, confident that there were no risks, decided to continue profitable cooperation with the banking institution.
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