An enterprise trying to pick its way through the legislation governing international sanctions faces a hard time. But get it wrong, and your insurance disappears
An AMRAE workshop was held this morning to discuss the problems posed by the imposition of sanctions and embargoes.
About 26 countries are currently the target of sanctions. They may be against specifically designated nationals (typically for leaders, spouses and officials suspected of stealing their country’s wealth), or against specific companies, or specific activities, such as financial transactions linked to the funding of terrorism.
Sanctions are designed to place immediate political pressure on a regime to reform, so they are not designed with let-out clauses in mind.
That includes insurance and reinsurance.
An enterprise that transgresses is likely to find itself left with no cover.
And yet, rival jurisdictions, especially the US and the European Union, may apply different rules. Cuba is the obvious case, where the US imposes sanctions, but the EU (and UN) do not.
But a company relying on this difference may find itself in trouble. In Syria, imposition of sanctions has changed the ground rules for companies happily trading there only a couple of years ago.
The lesson is not to overlook the risk of sanctions. Consult your insurers.
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