International Sanctions take various forms based on their purpose objective (e.g. to prevent armed conflict, counter terrorism). They can be individual (e.g. travel ban, asset freeze), target goods and services (e.g. arms embargoes or proliferation-related goods, dual-use goods), can be focused on core economic sectors (e.g. oil or financial sectors) or be comprehensive targeting entire country (e.g. North Korea).
Swedbank, as well as all other financial institutions, implements international and national Financial Sanctions based on Law on International Sanctions and National Sanctions of the Republic of Latvia. It has to be pointed out that depending on the countries where the financial institutions operates, the lists of sanctions which the financial institutions follow could slightly differ.
UNAll UN members are obliged to accept and carry out Resolutions passed by UN Security Council.
Link to UN Security Council sanctions regimes: https://www.un.org/securitycouncil/sanctions/information
EU. These are implemented through EU Council Regulations and have direct effect in all member states.
Link to EU sanctions regimes (there is a search function): https://www.sanctionsmap.eu/#/main
Bank also implements relevant U.S. Financial Sanctions based on the Swedbank Group Financial Sanctions Policy and Law on International Sanctions and National Sanctions of the Republic of Latvia. U.S. Financial Sanctions are imposed by U.S. President Executive Orders and implemented by the U.S. Department of the Treasury Office of Foreign Assets Control (OFAC).
By following U.S. Financial Sanctions, the Bank is being able to keep and maintain relations with banks in U.S. jurisdiction and provide payments and other products/services in USD currency or related to U.S. persons to its customers.
Link to U.S. OFAC sanctions regimes: https://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx
Link to U.S. OFAC search tool: https://sanctionssearch.ofac.treas.gov/
Additionally, Swedbank considers correspondent bank requirements as well as its own risk appetite. Therefore, Swedbank will not engage in any actions that directly or indirectly circumvent the Financial Sanctions prohibitions, correspondent banks and internal decisions.
Below are provided major types of Financial Sanctions implemented within Swedbank:
Targeted asset freezes. Swedbank has an obligation to freeze funds of EU blocked person and not to allow making funds available to EU Blocked persons. In case of U.S. imposed sanctions Swedbank will reject transaction or will not provide any products/ services related.
Arms embargoes/ restrictions on dual-use goods and technology for military purposes (Defence sector). Swedbank is obliged not to participate in provision of financial assistance related to mentioned goods or related services.
Core economic sector sanctions (Financial, Energy sectors). Swedbank will not provide any financial services restricted (e.g. loans, credits, dealings in financial instruments) as well as will not participate in any transactions related to prohibited activities (e.g. restrictions on provision of goods/ services related to oil sector) when these prohibitions apply to sanctioned subjects.
It is important to mention that the asset freeze and some sectoral restrictions are also applicable to entities that are owned or controlled, directly or indirectly, by a designated person. Although those entities may not be designated and included into sanctions lists the same Financial Sanctions are applicable for them and needed to be implemented by Swedbank.
EU imposed International Sanctions (including implemented UN sanctions) apply within the territory of EU and to all EU persons inside or outside the territory of EU. Thus, both financial institutions and their customers are legally responsible for complying with the EU sanctions and have the obligation to inform the competent authorities on the cases they know or suspect transactions with sanctioned entities.
Each Customer has to assess potential International Sanctions’ risks when involving themselves in business transactions. International Sanctions are generally widely publicised, and Customers, especially operating internationally, have to understand and take action regarding International Sanctions (not only Financial ones) that might be relevant for them. Therefore, customers have to consider business activities which could be exposed to Sanctions and take appropriate risk mitigation steps.
The information provided above is not all-embracing, and customers are advised to consult responsible authorities or should seek independent legal advice in case of any questions related to implementation of sanctions.
Due to Financial Sanctions, decision(s) adopted by Swedbank and terms and conditions of Swedbank's correspondent banks, Swedbank has the right not to execute payments (incl. crediting of incoming payments) in any currencies related to the EU and U.S. comprehensively sanctioned countries/ regions:
- North Korea;
- Crimea, Sevastopol
Swedbank may also hold the customer’s payment in order to investigate whether the payment is not related to Financial Sanctions and is in line with Swedbank internal decisions and correspondent banks’ risk appetite to/from any country/region where embargoes, other restrictive measures are imposed or to/from other high-risk countries/ regions. The execution of stopped payments may be delayed and customers may be asked to provide additional information about their transactions as a consequence of such investigation.
The list of countries/ regions inter alia includes (the provided list is not full as Financial Sanctions as well as internal decisions can be imposed/ revoked over the time):
- Myanmar (Burma);
- Sudan and South Sudan;
- Transnistria region;
- Lugansk/ Donetsk
In assessing if the payment is related to above mentioned countries/ regions the Bank will check connections to international sanctions imposed and analyse additionally:
- If the payment is related to a client’s customer located or operating in one of the above-mentioned countries. The relation could be direct (e.g. payment is received from the sender with the address in Crimea) or indirect (e.g. payment is received from other country (e.g. Turkey) but goods are being sent to Syria);
- If the payment is related to front companies which helps to avoid direct connection to above-mentioned countries;
- If information provided in payment details could be linked to above-mentioned countries (e.g. person name, vessel, name of city, harbour etc);
- If the payment lacks a substantial information to understand the payment purpose.
Swedbank would like to draw your attention to the fact that the term of executing payments or when its already executed (incl. crediting of incoming payments), may be extended or payments may be blocked or frozen by other banks than Swedbank which also participate in the execution of payment (correspondent banks, bank of beneficiary or sender). Swedbank will not compensate its clients for any damage resulting from the payment being frozen. Therefore; the customer should always evaluate potential International Sanctions risks by themselves.
Swedbank would like to draw attention to the fact that both the EU and the U.S. imposed broad (comprehensive) International Sanctions related to Crimea and Sevastopol regions. These sanctions cover restrictions and prohibitions on imports, exports, investments and financing in relation to these regions.
Due to the current situation; internal decisions and the risk policies of the main correspondent banks, Swedbank will not, as a rule, perform payments (both outgoing and incoming) to these regions or related to these regions (i.e. beneficiary address is indicated in Crimea or in other cases where any connection to these regions have been identified) in any currencies.
There are restrictive measures (sectoral sanctions) adopted by the EU and the U.S. on access to the capital market and new credits to defined Russian banks (i.e. Gazprombank, the Russian Agricultural Bank, Sberbank of Russia, Vnesheconombank, VTB Bank etc.). Swedbank has to ensure that international payments related to the banks mentioned do not violate restrictions imposed. Therefore, Swedbank could conduct additional checks on related payments. As payments associated with concealed financing are difficult to detect the fulfilment of the payment order may be delayed or even cancelled.
Both the EU and the U.S have imposed sanctions against the administrative bodies of the Lugansk and Donetsk region and individuals and entities closely linked to such bodies. Execution of payments, the addresses and details of which contain any reference to the respective regions and entities or individuals registered there, may take more time or their execution may be refused, due to the restrictions and prohibitions in place.
Military goods cover military technology and equipment which might be used for internal repression or international aggression or contribute to regional instability.
Dual-use good are items, including software and technology, which can be used for both civil and military purposes, and shall include all goods which can be used for manufacture of arms and military equipment, mass destruction weapons or their delivery etc.
Usually when arms embargoes/ restrictions on dual-use items are imposed, related technical, financial assistance as well as other services are also prohibited. Although the primary responsibility for the classification of goods and technologies lies with the customers sending or receiving such items, the prohibition to provide financial assistance is also mandatory for the Bank.
The prohibition on military goods/ dual-use items means that Swedbank cannot participate in any financial transactions, provide business support or any financial support to customers that sell, supply, transfer, mediate or export such goods to restricted countries (e.g. Russian Federation), if they are intended for military purposes, or sell, supply, transfer or export such goods to the certain EU listed entities. Therefore, Swedbank could conduct additional checks on related payments. Thus, the fulfilment of the payment order may be delayed or cancelled.
There are items related to Energy sector listed by EU which are restricted to be exported to Russia. U.S. has imposed restrictions on all goods/ non-financial services or technology in support of energy projects. Therefore, Bank must be aware if the Customer has an authorization from authorities in order not to be involved in prohibited transactions.
Link to EU Common Military List: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015XG0421(05)&from=EN
Link to EU Dual use controls: https://ec.europa.eu/trade/import-and-export-rules/export-from-eu/dual-use-controls/index_en.htm
Link to EU Council Regulation related to Russia: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02014R0833-20171202
Please note, if You or Your company operates in the field of shipping or is connected to mentioned field, then according to international shipping area regulations it is mandatory to add following information to the field “details of payment”:
- M/V: name of the ship.
- IMO: international maritime organisation number.
- FLAG: flag state.
- OWNERSHIP: name of the owner.
- TREGISTRATION: number and the country.
Otherwise, payment might be delayed since the missing details will be inquired from the bank of payer. If the payment is not in accordance with international standards (including the U.S. legal acts) the payment might be frozen in the correspondent bank
AS SWEDBANK classifies field of Transportation as a high-risk industry by the reason of possible transportation of sanctioned goods (ex. Military goods, Dual-Use goods, Goods related to energy sector etc.) and provision of services which are prohibited by EU, OFAC or UN legal requirements.
Please note, if You or Your company operates in the field of transportation or is connected to mentioned field, then you will be required to provide following information to the bank:
- Information regarding transported goods (including, but not limited to the following: Certificate of origin of goods, bills, invoices, transportation documents (ex. rail, air waybills) etc.).
- Information regarding final destination/final beneficiary of goods (beneficiary name, registration number, country, address).
- Information regarding consignor (beneficiary name, registration number, country, address).
If Bank requests You to provide documents and received information will not include all necessary information, payment might be delayed or rejected according to Swedbank Internal policy reason.
Therefore, if Your company operates in countries, which are included in Swedbank binding sanctions lists, you will be required to submit information regarding Sanctions risk internal control system measures taken within Your organisation.