International sanctions: how it works

Are there sanctions imposed on a country you trade with? This often means that you are not allowed to export or import a certain product. Or that you are not allowed to do business with certain people or companies in that country. As well as sanctions, you sometimes encounter a trade barrier when trading with other countries. This barrier causes problems in your importing and exporting.

Imposing sanctions

Among others, the United Nations (UN) and the European Union (EU) are able to impose sanctions. They take these coercive measures to punish undesirable behaviour by countries, organisations, or persons . There are sanctions in place for dozens of countries. For example, Iran, Russia, North Korea, and Libya. 

Overview of sanctions

Governments lay down sanctions in regulations or decrees. They usually share sanctions through news sources such as radio and television. An overview of UN and EU sanctions can be found on these websites: 

• United Nations
• EU Sanctions Map
• Customs Administration of the Netherlands

The Dutch government provides more background information on international sanctions.

Checking for sanctions

Suppose you have an ongoing contract with a customer in a country for which there is suddenly a sanction. Fulfilling earlier agreements may then no longer be possible. In such a case, check your business partners. And find out what they use the product for. And which customers they sell your products to.

To do this, use the list of individuals, companies and organisations subject to EU financial sanctions. Select 'Consolidated Financial Sanctions in PDF Format' from the list of downloads under 'Distributions'. Download the list as a PDF file. You do not need an account for this. In this file, search by name using the Ctrl+F keys.

Check whether you may export products or services to a country with sanctions. Perhaps there is a ban or you need an export licence. Check this with the Central Import and Export Office (CDIU). To do this, you need your product’s HS code.

The most common penalties

1. Financial sanctions

Financial sanctions dry up financial flows to a large extent. Bank balances are frozen by the measures, giving funds (in)directly to certain persons and organisations is prohibited. There may also be a complete ban on financial transactions from and to a certain country. Or banks may be removed from the SWIFT international payments system.

2. Trade restrictions

An embargo is sometimes imposed on goods that earn money for the authorities in that country. For example, oil or timber. Embargo is another word for ban. Sometimes you need an additional licence. For example, for sensitive goods, software, and technology that a country might use in weapons programmes. 

Diamonds

Trade in rough diamonds is also subject to sanctions. These are known as conflict diamonds or blood diamonds. Rebels trade these precious stones to finance an armed conflict with their country's government. The Kimberley Process is an international alliance dedicated to eliminating conflict diamonds from the trade. The Antwerp World Diamond Centre offers more information about importing or exporting rough diamonds.

3. Travel and visa restrictions

Sanctions are sometimes imposed on individuals. They are then subject to a travel ban or visa restrictions.

4. Arms embargoes

Arms embargoes ban the import or export of weapons, protective clothing, and military vehicles, Goods that can be used in different situations also fall under an arms embargo. These are called dual-use goods. For example, some flame retardants are used in construction,  but they can also be used as a raw material for poison gas. You will need a licence to import or export dual-use goods.  

Exceptions to sanctions

Sanctions must hit the right people and organisations. The aim is to spare the population of an affected country as much as possible. That is why there are always exceptions. Examples of these are diplomatic traffic, the supply and financing of humanitarian goods, and crisis management operations.

Violating sanctions

EU sanction measures apply to all EU member states. The Dutch government does not adapt these measures to Dutch laws. However, the Dutch government does stipulate in a sanctions regulation that violating the regulation is punishable. For this purpose, the government converts EU sanctions decisions into Dutch law. 

When violating a sanction, you violate the Sanctions Act 1977. You then commit an economic crime. This is a criminal offence for which you will be fined or imprisoned. Violating a sanction usually also causes reputational damage and high legal costs.

Evading sanctions

Knowingly evading a sanction is also punishable. Do you suspect that your customer is ultimately supplying the goods to a country for which sanctions are in place? If so, ask for an End-user statement (EUS). 

In it, your customer tells more about the sale and use of the products. Determining the final destination of your product remains tricky. There could always be a second or third buyer.

Read more about Dutch government policy on international sanctions. 

Difference between sanctions and trade barriers

Trade barriers are obstacles you encounter when doing international business. The country you do business with determines these barriers. Think of unnecessary administrative rules or non-agreed import duties. Trade barriers are not contained in an EU regulation or decision. Do you encounter trade barriers? Report them to the Trade Barriers Disclosure Office of the Ministry of Foreign Affairs (in Dutch). They will help you find a solution. 

Within the EU

You can experience trade barriers within the EU if an EU country does not properly comply with European rules. For example, because a government organisation does not follow the rules on the internal market. Or your diploma or professional qualification is not recognised. You can report these issues to SOLVIT. This EU network mediates between you and the relevant national organisations free of charge to find a solution.