Melissa Team | |
The Trump Administration has brought U.S. economic sanctions back into the public spotlight. Since placing Huawei, the world’s second largest smartphone maker, on the U.S. entity list, the Trump Administration has threatened more economic sanctions to countries and organizations throughout the world. The White House continues to tighten sanctions on Iran, threatens Turkey and warns European organization, Instex, with new sanctions.
With a growing ecommerce market and a tightening of U.S. sanctions, it is becoming more important than ever to be vigilant about electronic identity verification of customers and entities with which Americans do business.
Consequence of Noncompliance
The Office of Foreign Assets Control (OFAC) is responsible for enforcing economic sanctions for the U.S. OFAC describes fines for violations of sanctions as “substantial” and commonly exceeding several million dollars. OFAC sanctions are primarily against individuals, groups of individuals, and countries who pose a threat to U.S. foreign policy and national security. According to OFAC:
“U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, foreign subsidiaries owned or controlled by U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S.-origin goods to comply.”
Bloomberg acquired a letter written by Sigal Mandelker, the U.S. Treasury Department’s undersecretary for terrorism and financial intelligence. In regards to Europe’s attempts to circumvent the U.S. sanctions on Iran, Mandelker writes, “engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the [U.S.] financial system.”
Threats Grow World Over
Iran suffers from the tightening grip of U.S. sanctions, yet seems unlikely to budge on nuclear negotiations – meaning sanctions could continue to tighten. Recently there have also been threats to impose sanctions on NATO ally, Turkey, for acquiring weapons technologies from Russia.
Instex (Instrument in Support of Trade Exchanges) is a European transactional channel created by Germany, the U.K. and France to circumvent U.S. sanctions on Iran. Their intent is to salvage a nuclear deal with Iran after the U.S. had pulled out of the nuclear deal last year. The Treasury Department now warns all persons, businesses and government officials who are involved with Instex that “entities that transact in trade with the Iranian regime through any means may expose themselves to considerable sanctions risk.”
Despite these threats, one ban is already certain – Huawei is now one of those businesses placed on the Bureau of Industry and Security’s (BIS) entity list. No U.S. company may do business with Huawei and will otherwise face hefty prosecution, fines and possibly more severe consequences.
Are my Customers Who They Say They Are?
Ecommerce businesses can avoid crippling fines and legal battles with the U.S., by running customers through an electronic identity verification (eIDV) process. Using eIDV (or digital identity verification) will not only ensure protection against fraudulent ecommerce activities, but eIDV tools can also run your clients through a watchlist screening. Depending on the tool, this can ensure that your company is still in compliance with federal mandates, sanctions lists and more.
Personator® does it all. It will screen and electronically verify the identities of your customers and ensure you are in compliance with updated U.S. sanction lists including OFAC, BIS, Politically Exposed Persons (PEP), and more. Using Personator leaves companies at lesser risk of violating federal law as new and tightening sanctions continue to emerge.