On 7 January 2025, the UK’s Office of Trade Sanctions Implementation (OTSI) released two key guidance documents aimed at helping businesses address Russian sanctions evasion and implement “No Russia” clauses in contracts. These changes, alongside earlier updates under the Russia Sanctions (EU Exit) (Amendment) (No. 4), highlight the need for businesses to adopt robust compliance strategies.
New Guidance on Sanctions Compliance:
A Focus on Evasion and “No Russia” Clauses
The newly published OTSI guidance focuses on two core areas:
1. Combatting Sanctions Evasion
2. Incorporating “No Russia” Clauses in Contracts
1. Combatting Sanctions Evasion
OTSI’s guidance helps businesses identify and mitigate risks of circumvention practices tied to Russian sanctions. Key highlights include:
– A list of high-risk goods, such as military and dual-use items, prone to diversion.
– Specific red flags grouped into categories:
– Products: Items with military applications or incompatible with the buyer’s business activities.
– Customers: Changes in ownership, ties to sanctioned entities, or suspicious locations.
– Transactions: Unusual payment routes, mismatched documentation, or fraudulent details.
– Export Destinations: Suspicious shipping routes or exports to high-risk countries like China, India, and Vietnam.
– Enhanced due diligence measures, including verification of end-users and constant monitoring of trade flows.
2. “No Russia” Clauses
While not a legal requirement in the UK, OTSI encourages exporters to adopt “No Russia” clauses as best practice in contracts.
These clauses prohibit the re-export of critical goods to Russia, especially items that could support the Russian military or industry.
The guidance provides a template clause that businesses can adapt, with a specific provision to notify UK authorities of suspected breaches.
However, OTSI emphasizes that “no Russia” clauses must be paired with thorough due diligence, as contractual safeguards alone do not guarantee compliance.
How AXIANTIS Supports Businesses Through Regulatory Changes
AXIANTIS compliance team has been at the forefront of helping businesses adapt to complex sanctions regulations, including the latest guidance from OTSI.
Our expertise in compliance management brings businesses the needed expertise to keep up with their regulatory obligations.
Solutions for Sanctions Compliance
AXIANTIS offers comprehensive solutions to help businesses manage sanctions-related challenges. Our services include:
– Real-Time Monitoring: Keeping clients updated on evolving OFSI and OTSI regulations.
– Risk Assessments: Reviewing business activities to identify high-risk areas and deploying tailored control frameworks.
– operational Guidance: Assisting in implementing policies and processes aligning with best regulatory compliance practices.
Best Practices :
OTSI’s guidance outlines several best practices for businesses to adopt. Axiantis regulatory compliance team provides the tools and expertise to help implement these measures, including:
1. Strategic Risk Assessments
– Reviewing business activities to prioritize enhanced due diligence for high-risk products and destinations.
– Deploying tailored control frameworks for areas of greatest concern, such as dual-use goods or sensitive export markets.
2. Enhanced Due Diligence
– Verifying the legitimacy of end-users, associated parties, and customer details.
– Conducting periodic reviews of customer purchasing motives and activity.
3. Screening Tools
– Utilizing advanced screening tools and databases to support compliance lists checks, due diligence checks and flag potential risks.
4. Ongoing Monitoring and Recordkeeping
– Monitoring trade flows and customer behavior for signs of circumvention.
– Conducting periodic refreshes of reviews to ensure compliance measures remain effective.
– Keeping written records of due diligence and compliance activities to demonstrate regulatory adherence.
AXIANTIS : Your Compliance Partner
AXIANTIS team simplifies compliance by providing tailored solutions and services to address the challenges posed by sanctions regulations. From real-time updates to enhanced due diligence, our expertise ensures that businesses remain compliant while minimizing risks.
Contact AXIANTIS to learn how our Partners can help your business navigate these challenges confidently.