How Do Sanctions On Individuals Work?

Dozens of individuals have been sanctioned following the Russian invasion of Ukraine as national governments and international organizations attempt to put pressure on the Russian government. The sanctions include numerous restrictions, including financial transactions, travel, and the use of assets. 

Sanctions against individuals are typically imposed as a response to actions such as human rights abuses, weapons proliferation, corruption, and terrorism and are becoming more commonplace. However, these sanctions have positive and negative impacts and are considered controversial in many circles. 

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Types of Sanctions Against Individuals

In order to pressure them to change their behavior or to hold them accountable for actions that violate international laws or norms, governments and organisations may impose sanctions against individuals, including: 

• Economic Sanctions limit the financial activities of individuals, e.g. freezing or seizing their assets, restricting their financial transactions, and implementing a widespread ban that prohibits citizens or companies from conducting trade with the targeted individual.  
• Travel restrictions prevent targeted individuals from travelling outside their country, including denying entry visas or revoking existing visas and restricting travel within their own country in order to limit their mobility. 
• Asset freezes, including freezing their bank accounts, real estate and other financial assets so that the targeted individual is unable to access financial resources. 

These types of sanctions can be extremely effective as they limit the individuals' ability to carry out activities that violate international laws.

How Sanctions Against Individuals Are Imposed

The UN Security Council has the authority to impose sanctions under Chapter VII of the UN Charter in order to address threats to international peace and security, including terrorism, weapons proliferation and human rights abuses. 

National governments also have the authority to impose sanctions against individuals within their borders, including freezing assets and imposing travel restrictions, among other measures. National governments may act independently or in coordination with other countries or international organisations, such as the UN, to impose these sanctions.

International organisztions, such as the European Union (EU) and the Organization for Security and Co-operation in Europe (OSCE), may also impose sanctions against individuals to address security, human rights, or other concerns in a particular region. 

Sanctions against individuals are intended to have a direct impact on the target by limiting financial and political resources, but the effectiveness of sanctions may vary depending on the specific circumstances of the individual. In some instances, sanctions cause significant financial hardship to individuals. They may also affect the economies of the targeted country, leading to inflation, unemployment, and other economic difficulties for the general population. Some see sanctions against individuals as having a negative impact on the human rights of the target, as freezing assets and restricting travel may limit their ability to access essential services and support.

It's also been argued that sanctions can be difficult to enforce and may not have the intended impact on the targeted individual and that sanctions can be imposed without sufficient evidence and are difficult to lift, which may worsen international relations. 

Targeted individuals often attempt to evade sanctions by using alternative financial systems or concealing their assets, which makes them difficult to enforce. 

Examples of Sanctioned Individuals 

There are several individuals who appear on the international sanctions list, including: 

• Kim Jong-un, the North Korean Supreme Leader. The United Nations (UN) imposed these sanctions due to the country's weapons proliferation and human rights abuses.
• Vladimir Putin, President of Russia. Putin has been under EU sanctions due to the 2014 annexation of Crimea. Additional sanctions were imposed due to the ongoing conflict in Ukraine.
• Ali Khamenei, Supreme Leader of Iran. Khamenei is under US sanctions due to Iran's nuclear program and human rights abuses.
• Bashar al-Assad, President of Syria. Al-Assad is under EU and US sanctions due to the human rights abuses committed by the Syrian government during the Syrian Civil War.
• Nicolás Maduro, President of Venezuela. Maduro is under US sanctions due to the country's human rights abuses, corruption, and erosion of democratic institutions.

What Should Organizations Do to Ensure That They Are Adhering to Sanctions? 

Organizations must ensure that they have robust sanctions screening processes in place. They must also adhere to sanctions against individuals and minimising their risks of violating sanctions laws and regulations. This includes using automated sanctions screening tools (like sanctions.io) to identify individuals and entities that are subject to sanctions before they are onboarded. Screening tools should be regularly updated to reflect changes in the sanctions lists.

It's also essential that all firms develop a comprehensive sanctions compliance program that outlines the procedures and policies for identifying and mitigating risks associated with sanctions. All employees must be trained on the applicable sanctions laws and regulations, as well as the firm's sanctions compliance program, on an ongoing basis. 

Due diligence checks must be carried out on all potential business partners, including suppliers, customers, and intermediaries, to ensure that they are not subject to sanctions. This includes obtaining information about the ownership structure of the entity and its relationship with sanctioned individuals.

Finally, firms should ensure that internal controls are put into place that ensures that their sanctions compliance program is effective, including implementing policies and procedures for reviewing transactions, conducting risk assessments, and documenting all sanctions-related activities.

Conducting trade with sanctioned individuals, even inadvertently, may lead to severe fines and penalties, including criminal charges and even potential imprisonment of executives or restrictions on the firm's ability to operate in specific regions. It's important to remain compliant at all times. If you need assistance in building your sanctions compliance process, reach out to our team at sanctions.io.

Learn More About Sanctions Screening

To learn more about sanctions screening, you can read sanctions.io's Ultimate Sanctions Screening Guide.