Mitigation of Risks of Sanctions and other Violations by Directors, Trustees and Beneficiaries
Scrutiny on offshore transactions and their participants is at an all-time high. Through an ever growing number of regulations and laws, parties to transactions and third party providers from banks to corporate service providers are required to gather and, in some circumstances, share information with governments and regulatory authorities. For the underlying officers and entities as well as the providers, breach of these regulations and laws attract scrutiny, can spark out-of-proportion penalties and – maybe worst of all – potential severing of business services, suspension of licences, or freezing of assets and accounts, while things are sorted out. For everyone involved there is also reputational risk. We attempt below to draw attention to what can be done on a proactive basis to reduce risk. This piece is not exhaustive because specific facts and circumstances can change things radically, so please contact us for specific advice before taking the leap on some of these recommendations. Dealing with sanctions breaches, we highlight the increasing scope and breadth of the directives, laws and regulations that have extended the sanctioned or restricted parties involved to include service providers such as trustees and corporate services providers. Further it is increasingly common to use the word “connected” in reference to the transaction(s). This is very broad and seemingly catches any reasonably involved party to a transaction. Strict accountability is assumed at the outset with little wriggle room for mitigating circumstances. Sanctions transactions and sanctioned parties can be particularly hard to keep track of given the sheer volume and frequency of additions and changes. Given these complicating factors, we recommend pro-active action by trustees, directors, and counterparties. The ability to provide rationale and compliance can make