The subject of sanctions applies to everyone. Complying with sanctions requires using a risk-based approach. Even though guidance is provided on how best to comply with sanctions, it is not expected that the average citizen will have a personal, fully formed sanctions compliance program.

The Subject of Sanctions

Generally speaking, sanctions apply to everyone. While, for instance, an individual might not personally conduct due diligence of every vendor before buying a cup of coffee to determine whether it is sanctioned, the buyer could be held liable, for example, if the beans were sourced from Iran, however unlikely.

Complying with sanctions requires using a risk-based approach. Even though guidance is provided on how best to comply with sanctions, it is not expected that the average citizen will have a personal, fully formed sanctions compliance program.

Additionally, sanctions are a matter of jurisdiction. Citizens of a country, and ins some countries permanent residents as well, must comply with sanctions regardless of whether they are outside of their home country. This is true for the US, EU, and most other autonomous sanctions. If a person is on vacation overseas, their country’s sanctions laws still apply. Conversely, any individual, regardless of citizenship, must comply with the sanctions law of any country they are in physically.

Now in the United States, there is a wide array of requirements to determine who is where subject to sanction. Probably the most important of these requirements is that US citizens and permanent residents wherever located are subject to US sanctions.

The same applies to companies and other entities organized under US law, to all people and organizations, whatever their origin, physically in the United States, and all branches of US companies and other entities throughout the world. This means that a US company might not violate US sanctions in their non-US branch.

Now for the European Union, the sanctions it imposes will apply only where links to the EU are present. In particular, sanctions apply within the territory of the European Union, on board any aircraft or any vessel under the jurisdiction of a Member State, to any person inside or outside the territory of the European Union, to any legal person, entity or body, inside or outside the territory of the European Union, which is incorporated or constituted under the law of a Member State, and, finally, to any legal person, entity or body in respect of any business done in whole or in part within the European Union.

In the US, legal entities organized under US law and their foreign branches must comply with US sanctions. The same holds for legal entities and their branches that are organized under the laws of an EU jurisdiction. For example, UK legal entities established under UK law, including their branches, must also comply with UK financial sanctions in force, irrespective of where their activities take place.

Final Thoughts

It might surprise you to learn that not only countries and organizations can become a subject of sanctions. Generally speaking, sanctions are applicable to everyone. While, for instance, an individual might not personally conduct due diligence of every vendor prior to buying a cup of coffee in order to determine whether it is sanctioned, the buyer could be held liable, for example, if the beans were sourced from Iran, however unlikely.