How US sanctions might apply to you
After much high profile wrangling, BNP Paribas has agreed to pay nearly US$9 billion to settle with US prosecutors over accusations of sanctions violations.
The transactions carried out by BNP Paribas were not illegal under French law, nor were they illegal under EU law. They did not breach France’s obligations under the World Trade Organisation or the United Nations. No agreements between France and the USA were violated.
So, why was the bank accused of sanctions violations by US prosecutors?
Because the transactions were denominated in US dollars – accordingly, the deals had to pass through New York and thus came under the scrutiny of the US Regulatory Authority.
Where funds pass through US banks, and the US bank deems those funds to be tainted, blocked or frozen funds, the US bank has an obligation to hold the funds and report the transfer to the enforcement authorities. The bank does not inform the parties in question.
This is of great concern to all working in the aviation industry as most transactions take place in dollars and consequently US authorities can claim jurisdiction. They will also do so if the funds are in another currency but come through US banks and therefore through US territory.
To minimise the risk of incurring potentially heavy penalties, it is important that extra precautions are taken to ensure that a transaction does not violate United States sanctions.
Actions to take to avoid breaching the sanctions regime include:
understand the sanctions risks
have in place an effective sanctions compliance framework
train staff on sanctions to ensure compliance.
For more information on aviation law or related enquiries, contact Alina Nosek, Head of Aviation.
Published: 12 Nov 2014