While some modifications to the legal framework and internal procedures may be required to apply existing AML/CFT regulations to the sanctions sphere, banks, fundamentally, have access to much of the information needed to trace the trade in export-controlled goods – and the experience and resources to use it. [...] 3.1.1 Leveraging banks’ critical role in the trade in export-controlled goods The fact that large, multinational companies appear to be the initial sellers of a significant share of the trade in controlled goods – independent of where the items are manufactured – means that financial institutions from coalition jurisdictions are involved in the transactions, either as the seller’s bank or via corr. [...] Ultimately, companies undertake very straightforward calculations weighing the costs of compliance – eg loss of business or resources invested in due-diligence procedures – the risk of discovery in the case of violations of laws and regulations, and the size of the penalties incurred. [...] Even in the US, where authorities have somewhat more experience with export controls, the agency in question – the US Department of Commerce’s Bureau of Industry and Security (BIS) – does not have the personnel for the enforcement of comprehensive measures like those in the Russia case. [...] 51 According to the Home Office’s 2019 review of the Exchange of Notes scheme, law enforcement agencies had found the agreement “extremely useful;” however, it was “too soon to quantify the full outcome in terms of successful investigations.” See the Home Office’s ‘Statutory review of the implementation of the exchange of notes on beneficial ownership between the United Kingdom, Crown Dependencies.
Related Organizations
- Pages
- 23
- Published in
- Belgium
Table of Contents
- BRU_Working_Paper_cover_2024_10 1
- WP_export_controls_final_260424 2
- 1 Export controls: a new frontier in economic statecraft 2
- 2 The Russia case: challenges of export control implementation 4
- 3 The financial system’s role in improving export controls 9
- 3.1 Using financial institutions to monitor trade flows and stop violations 9
- 3.1.1 Leveraging banks’ critical role in the trade in export-controlled goods 10
- 3.1.2 Revising regulatory frameworks to support compliance 11
- 3.1.3 Expanding access to critical information for export controls enforcement 13
- 3.1.4 Providing clear guidance and moving towards a risk-based system 13
- 3.2 Empowering the corporate sector by applying lessons from the financial system 14
- 3.2.1 Understanding complex supply chains and holding distributors accountable 14
- 3.2.2 Creating incentives for due diligence and building institutional capacities 15
- 3.2.3 Enabling non-financial companies to conduct proper due diligence 16
- 4 Conclusions: towards effective and credible export controls 17
- References 18
- BRU_Working_Paper_BACKcover_2023_01 23
