Do you ever think about the sanctions nations and countries can place on others to prevent them from committing illegal acts?
As a financial expert once said, sanctions are a powerful tool for behavioural regime change and maintaining international peace and security, not just as punishment.
Sanctions regimes place financial restrictions on groups ranging from governments and organizations to individuals worldwide.
Businesses with foreign partners and suppliers should understand how the EU sanctions work and, more importantly, how to comply.
Throughout this article, we will review the basics of EU secondary sanctions and how they may impact global trade and compliance.
What are EU sanctions?
EU is an abbreviation for the European Union, a political and economic organization of 27 European countries. The European Union itself has examined measures that are available to help protect the interests of the organization and its objectives, to compel them to undertake policies and to conduct them. This also included sanctions from both OFAC secondary sanctions and the EU.
In 2023, the EU imposed over 30 sanctions regimes restricting several countries, firms, and individuals. If you are involved in any import and export operations, then you may be thinking about the secondary sanctions meaning.
Bonus: Stay OFAC secondary sanctions compliant and not land penalties on your business
EU Secondary Sanctions
EU Secondary Sanctions are used to prevent other countries and companies from helping others violate EU sanctions. These sanctions are already imposed outside of the EU, where the latter imposes them to enforce compliance to an even greater extent. Companies must therefore understand these sanctions to avoid incurring costly fines and remain compliant. For example, in 2024, the EU expanded its sanctioned list to various sectors that highlight the significance of global complaince.
Targets of Secondary Sanctions
The main purpose of the EU secondary sanctions is to encourage global complaints about EU sanctions by restraining non-EU countries from doing business with sanctioned entities
- Fostering international peace and security: Not so much by encouraging sanction regimes and threatening actions that could undermine global stability.
- Supporting democracy and human rights: This guarantees that enterprises do not support governments or companies for human rights violations.
- Upholding international law values: Ensure EU sanctions comply with international law and promote peaceful relations
Types of EU Sanctions
Restrictive measures, such as export controls, asset freezes, financial restrictions, and travel and visa restrictions, can be used to pursue the objectives of the Common Foreign and Security Policy. So these actions can be taken against individuals and companies and organizations and governments in non-EU countries.
EU laws carry legal obligations and each member state is responsible for both its implementation and enforcement of penalties on its territory.
The European Commission maintains an up-to-date overall list of people, bodies, and companies who are subject to European Union financial sanctions (sec. Sanctions list).
There are now more than 30 sanctions regimes covering specific country targets including Afghanistan, the Democratic People’s Republic of Korea, Iran and Russia, or thematic regimes covering areas such as Proliferation and Use of Chemical Weapons, Human Rights Violations and Abuses, and Cyber-Attacks.
Who decides to impose EU sanctions?
The Council can adopt decisions to impose sanctions under the EU autonomous sanctions regime based on proposals made by Member States or the High Representative of the Union for Foreign Affairs and Security Policy (HR). They typically do this over a year.
In 2023, the European Union (EU) has already imposed more than 50 new sanctions in response to foreign crises and violations of international law.
Where do EU sanctions apply?
The EU secondary sanctions are a foreign policy force multiplier applicable to a region (not just the EU). Still, the jurisdiction of the remaining countries is limited to the EU borders. In other words, companies that are in the EU or do business there have to adhere to the requirements it lays out.
A new report states that 605 multinational corporations are now subjected to scrutiny to confirm compliance with EU sanctions. Investigations into specific cases of non-compliance are the responsibility of the Member States and their competent authorities. Member states are obligated to implement appropriate measures in cases of violations of EU sanctions.
How much does EU sanctions matter?
Most EU sanctions screening regimes deal with cost-free measures (freezing assets, instituting arms embargos, and visa bans). The EU has some financial sanctions that leave a heavy mark when it handles individuals or institutions since it is the biggest trade power in the world. It represents 16 per cent of world trade, imports, and exports. And it is typically hard to gauge that impact because sanctions are only one of myriad factors affecting a country’s economy.
Get more information on secondary EU sanctions from trusted sources. Staying abreast of these sanctions can enable firms to protect themselves and participate in international peace.
