Our Trade, Industry and Logistics team regularly publishes articles as part of the series “Ten Frequently Asked Questions About…”. Through this series, we aim to provide accessible and practical information on specific legal concepts, topics and current developments. Should you have an eleventh question after reading these ten frequently asked questions, we would of course be happy to assist you. You can contact one of our TIL (Trade, Industry & Logistics) colleagues for further information.
The ten most frequently asked questions about sanctions.
Kneppelhout advises companies on matters relating to international and EU sanctions legislation. We provide guidance on the application and compliance with sanctions rules, assist with setting up internal compliance processes, and support companies when they are confronted with sanctions risks or enforcement measures. Below, we address the ten most frequently asked questions.
1. What are sanctions and what are they used for?
Sanctions are legal measures imposed to influence, punish or deter certain behaviour. They may be imposed on countries, individuals or entities. In this article, we focus on sanctions imposed for geopolitical reasons, such as human rights violations, military aggression or threats to the international legal order. These sanctions are often used as an alternative to diplomatic or military action and may range from travel bans and asset freezes to arms embargoes or trade restrictions.
2. Who adopts geopolitical sanctions and how do they operate legally?
Within the European Union, geopolitical sanctions are adopted under the Common Foreign and Security Policy (CFSP). Such sanctions may be based on resolutions of the United Nations Security Council, but can also be imposed independently by the EU. In the Netherlands, EU sanctions are implemented pursuant to the Sanctions Act 1977, a framework act enabling the implementation of international sanctions. Please note: this article exclusively addresses geopolitical sanctions. Other types of sanctions, such as criminal or disciplinary sanctions, fall outside its scope.
3. To whom or to what can EU sanctions apply?
The EU has imposed sanctions on dozens of countries, including Russia, Iran, North Korea and Syria. In addition to countries, sanctions may also target natural persons, companies or institutions. Examples include Russian oligarchs or Iranian airlines. Such sanctions may take the form of asset freezes, travel bans, export restrictions or investment prohibitions.
4. Am I still allowed to do business with a company located in a sanctioned country?
This very much depends on the specific circumstances. In some cases, transactions with parties located in sanctioned countries are entirely prohibited, for example in relation to certain Russian or North Korean entities. In other cases, restrictive measures apply, such as a licensing requirement or a ban on the supply of specific goods, technologies or services. It is therefore essential to assess each case individually against the applicable sanctions rules. In many situations, it is advisable to consult a sanctions lawyer to ensure compliance and limit legal risks.
5. How can I check whether my customer or supplier is listed on a sanctions list?
This requires screening parties against national and international sanctions lists. While manual checks are possible, they carry risks, as sanctions lists are frequently updated. What is permitted today may be prohibited tomorrow. The use of specialised screening tools is therefore recommended. These systems automatically keep sanctions lists up to date and identify risks at an early stage.
Please note: that screening should not be limited to direct counterparties. It also extends to beneficial owners or persons exercising control, such as ultimate beneficial owners (UBOs). For in‑depth sanctions advice on a specific entity, product or trade route, legal assessment by a sanctions lawyer is strongly recommended.
6. What are the risks if I unintentionally breach sanctions?
The consequences may be significant. In the Netherlands, non‑compliance with sanctions legislation may lead to administrative fines, seizure of goods or criminal prosecution. Banks may also freeze or terminate accounts. In addition, companies may suffer reputational damage, particularly in politically sensitive contexts. Effective risk management and legal guidance are therefore essential.
7. Why should my company consider sanctions rules even if we do not directly do business with high‑risk countries?
Sanctions rules do not only apply to countries subject to well‑known sanctions regimes, such as Russia or Iran. They may also apply to specific products, technologies, financial transactions or individuals, regardless of destination. Moreover, sanctions may have indirect effects through suppliers, customers or intermediaries. For any company engaged in international business, it is therefore crucial to properly identify and manage sanctions risks.
8. What should I do if my bank raises questions or indicates that a transaction may breach sanctions rules?
Fortunately, it is relatively rare for companies to face the sudden blocking of an account or transaction without prior notice. In practice, banks usually first contact the company to indicate that a potential sanctions risk or ambiguity has been identified. This provides an opportunity to give clarification and address possible misunderstandings. In such situations, it is important to act swiftly and carefully. We advise involving legal counsel at an early stage. A sanctions lawyer can assist with communications with the bank, help draft a clear explanation and prevent escalation or further measures, such as transaction blocks or reports to supervisory authorities.
9. Should my company adopt an internal sanctions policy?
Yes. Based on our experience, we recommend establishing an internal sanctions policy, often as part of an Internal Compliance Programme (ICP), particularly for companies active in international trade. Such a policy not only helps manage risks, but is increasingly required by authorities, banks and other supervisory bodies.
10. How can Kneppelhout assist with sanctions‑related matters?
Kneppelhout advises companies on sanctions regulations in the broadest sense. Whether the issue concerns export restrictions, sanctions against Russia, customer screening or the drafting of an ICP (Internal Compliance Programme), we help organisations navigate this complex area. We can also provide high‑level guidance on US or UK sanctions, assess associated risks and, where necessary, refer clients to local sanctions specialists.
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