SCREENING OF BUSINESS PARTNERS TOWARDS SANCTIONS

Briefly about the main things:

There are different types of sanctions, but companies in the course of their economic activities most often face:

• targeted sanctions against specific individuals who are occasionally included in the sanctions list. These sanctions can be checked on the FID website;
• sectoral sanctions or restrictions on making certain goods and services available. A sectoral sanction map can be used to check sectoral sanctions.

The sanctions directly applicable in Latvia are those imposed by the EU, the UN and national (Latvia).

As for US and UK sanctions, they only apply in certain areas, such as financial and capital markets. Although Latvian companies are not prohibited from cooperating with US and UK-sanctioned individuals, restrictions may arise from receiving payment from those individuals for goods or services provided, as banks may refuse to execute payments or even freeze them.

The US OFAC sanctions can be checked here.

The sanctions imposed by the UK OFSI can be checked here.

Depending on the nature and economic significance of the transaction, companies need to check not only their clients' transactions, but also their clients' business partners. For example, if a client's customer cooperates with another company, which or whose UBO is a sanctioned person, it may also be treated as a breach of sanctions by the first company.

Circumvention or violation of sanctions may result in criminal liability.

It should be noted that NILLTPFN law subjects have a reporting obligation to the FID and VDD in cases where their client circumvents or violates sanctions.

Key sectoral sanctions against Russia and Belarus:

It is prohibited to sell, export, supply or transfer, directly or indirectly, to persons in Belarus or for use in Belarus:

• weapons and related materiel of all kinds;
• dual-use goods;
• equipment which might be used for internal repression;
• machinery and electrical equipment (Annex XIV);
• goods and technology that could contribute to the enhancement of Belarus' military and technological capabilities or to the development of its defense and security sector;
• telecommunications equipment (Annex IV);
• goods used for the production or manufacturing of tobacco products.

It is prohibited to purchase, transfer, import, directly or indirectly from Belarus (including goods originating in Belarus):

• cement and cement products;
• iron, steel and their products;
• rubber products;
• wood and wood products; charcoal
• potassium chloride ("potash") products
• Mineral products

It is prohibited to sell, export, supply or transfer, directly or indirectly, to persons in Russia or for use in Russia:

• dual-use goods and technologies;
• goods and technology that could contribute to increasing Russia's military and technological capabilities or to the defense and security sector development ​(Annex VII);
• goods and technology (Annex II, XVI);
• goods and technology suitable for use in petroleum refining and natural gas liquefaction;
• goods and technology suitable for use in the aviation industries;
• luxury goods (Annex XVIII);
• goods which could contribute in particular to the enhancement of Russian industrial capacities (Annex XXIII);

It is prohibited to purchase, transfer, import, directly or indirectly from Belarus (including goods originating in Belarus):

• iron and steel products (Annex XVII);
• goods which generate significant revenues for Russia (Annex XXI) – crustaceans, caviar, various chemicals, fertilizers, rubber tires, wood and articles thereof, cement, glass and glassware, miscellaneous metals, etc.
• coal and other solid fossil fuels;

Please take into consideration that the above guidelines do not provide all sanctions, for example, restrictions on specific transactions like investments in Russia, transactions with securities or limitations to provide professional or accounting services on behalf of the companies with UBO’s being sanctioned. If you require assistance with verification of your company’s business partners, please contact our expert Laura Vaivode at email: laura@bakertilly.lv or corporate lawyer Ivo Rudzitis, email: ivo@bakertilly.lv, to verify specific transactions.