Jag is the founder and CEO of Certa, a third-party lifecycle management platform for procurement, compliance and ESG. The sanctions landscape has evolved rapidly in recent years due to heightened political volatility and the continued use of international sanctions as punitive measures. In response to Russia's invasion of Ukraine in late February 2022, a number of Russian corporations and oligarchs have been targeted by sanctions, posing risks for any U.S. entity engaging in business with them.
Historically, sanctions enforcement was perceived as lax, leading many companies to overlook compliance and continue business dealings with blocked entities. However, the U.S. Department of Justice announced plans to ramp up sanctions enforcement in early 2023, resulting in a significant increase in penalties collected by the Office of Foreign Assets Control (OFAC) for violations.
Given the stricter enforcement environment, U.S. companies are urged to prioritize sanctions compliance to avoid penalties. Supply chain leaders are advised to take four key steps to mitigate the risk of sanctions violations:
- Set clear compliance expectations at the policy level to foster a culture of adherence.
- Regularly audit compliance processes and address shortcomings promptly.
- Adopt a proactive approach to identify and prevent potential violations.
- Implement Enhanced Due Diligence (EDD) strategies to scrutinize high-risk partnerships and assess ultimate beneficial owners of suppliers to avoid inadvertent violations.
For companies struggling to manually monitor suppliers for compliance, leveraging automation and AI-powered compliance tools can streamline the process and enhance monitoring capabilities.
As the U.S. intensifies sanctions enforcement, companies must prioritize compliance efforts to avoid penalties and safeguard their operations. Ignoring the trend of stricter enforcement could expose businesses to significant risks and financial consequences.
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