Czech Financial Institutions Urged to Strengthen Sanctions Compliance Amid Unpredictable EU-US Measures
Prague Seminar Highlights Importance of Robust Sanctions Compliance
On October 16, 2014, Kinstellar’s Prague office hosted a seminar that emphasized the critical importance for Czech financial institutions to maintain robust sanctions compliance measures in light of the ever-changing international sanctions landscape.
Unpredictable EU-US Measures
The European Union and United States have imposed various punitive measures on individuals and entities deemed to be linked to the political situation in Ukraine and Russia. These sanctions include:
- Travel restrictions
- Asset freezes
- Prohibitions on accessing capital markets and credit facilities
Czech financial institutions must carefully scrutinize the complex sanction lists, which differ between EU and US regimes, to prevent any potential legal breaches.
EU Sanctions Measures
The seminar highlighted specific punitive measures adopted by the European Union, including:
- Bans on providing investment services related to transferable securities and money market instruments
- Restrictions on financing certain types of goods and technologies
Czech Government’s Stance
The Czech government has also implemented a less restrictive stance on investing in Russia, with plans to promote economic diplomacy and open up alternative markets.
Risks of Non-Compliance
The seminar warned that Czech financial institutions may soon face criminal prosecutions for breaching international sanctions. An amendment to the Act on the Criminal Liability of Legal Persons currently being debated by the Czech Parliament is expected to introduce corporate liability for certain crimes, including breaches of international sanctions. This change will significantly increase the risk of reputational damage and penalties for non-compliance.
Recommendations
To mitigate these risks, Kinstellar recommends that Czech financial institutions take several steps, including:
- Supplementing existing compliance programs
- Conducting regular checks on their functionality
- Educating employees on their duties and reporting procedures
- Internally investigating any errors identified
Prioritizing Sanctions Compliance
Kinstellar urges financial institutions to prioritize sanctions compliance to avoid potential criminal liability and reputational damage.
Contact Information
For more information on this critical area, please contact Jitka Logesova, Partner and head of Kinstellar’s Compliance, Risk and Sensitive Investigations practice, at [insert email].