Financial Crime World

Doing Business in Western Sahara: Navigating Operational and Sanctions Risks

Western Sahara, a disputed territory claimed by Morocco but recognized by some African countries as an independent state, poses significant risks for businesses operating there. In this article, we will discuss the operational and sanctions risks associated with doing business in Western Sahara, and provide recommendations for mitigating these risks.

Operational Risks

The increased hostilities between Morocco and the Polisario Front have created uncertainties about doing business in Western Sahara. Companies involved in large-scale projects in the territory may face legal and moral risks if they are seen as supporting an “illegal occupier.” These operational risks can be broken down into several key areas:

  • Uncertainty about project viability: The conflict between Morocco and the Polisario Front makes it difficult to predict the long-term viability of large-scale projects in Western Sahara.
  • Reputational risk: Companies that support projects in Western Sahara may face reputational damage if they are seen as supporting an “illegal occupier.”
  • Legal risks: Businesses operating in Western Sahara may be subject to legal challenges from rival claimants or other stakeholders.

Sanctions Risks

The moral uncertainty surrounding trade agreements in the region also poses sanctions risks for businesses operating in Western Sahara. Some organizations have called for institutions to impose sanctions on Morocco for violating human rights in Western Sahara. These sanctions risks can be broken down into several key areas:

  • Economic sanctions: Economic sanctions imposed by international organizations or governments can limit a company’s access to markets, finance, and other resources.
  • Reputational damage: Companies that are seen as supporting Moroccan actions in Western Sahara may face reputational damage if they are associated with human rights abuses.
  • Regulatory risks: Businesses operating in Western Sahara may be subject to regulatory challenges from governments or international organizations.

Mitigating Risks

To mitigate these risks, companies need sound information about the situation on the ground. The following strategies can help:

  • Monitor developments through media and corporate communications: Stay up-to-date with news and announcements from relevant stakeholders.
  • Enhance due diligence (EDD): Conduct thorough research into a company’s operations, partners, and suppliers to identify potential risks.
  • Use adverse media screening (AMS) services: Screen for negative media coverage that may indicate reputational risks.
  • Utilize due diligence reports: Leverage reports from reputable sources to gain insights into a company’s operations and reputation.

Conclusion

Doing business in Western Sahara requires careful consideration of operational and sanctions risks. By monitoring developments, enhancing due diligence, and utilizing adverse media screening services, companies can better navigate these complex threats. Reliable information is essential for making informed decisions about investments, partnerships, and other business activities in this sensitive region.