When faced with the choice of cooperating with a sanctioned downstream company, enterprises need to consider the possible risks. If it is the US SDN list, it is necessary to confirm the differences between secondary sanctions and primary sanctions.

First of all, it should be clear that the SDN (Specially Designated Nationals) list is issued by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury. Individuals and entities on the list will be subject to specific sanctions. This means that any US person or entity within the United States that conducts transactions with entities on the SDN list will be restricted.

1、Effectiveness of secondary sanctions:Among the sanctions lists of the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury, entities or individuals involved in secondary sanctions usually have specific markings (marked in the listsubject to secondary sanctions) to indicate that they are affected by secondary sanctions. Then your downstream company is likely to be sanctioned by measures including being included in the SDN list, denying executives entry into the US, prohibitingimport and exportprivileges, and prohibiting the use of the US financial system or specific services. In addition, if your company is aware of this and continues to cooperate with it, then your company may also be affected by secondary sanctions.

Note:In some cases, entities or individuals on the sanctions list will be accompanied by a line of annotation to clearly indicate that they are affected by secondary sanctions. For example:Entity NameBasisDesignated due to laws or administrative orders. Non - US persons may face sanctions risks when conducting significant transactions with them.The Effectiveness of Primary Sanctions:

If the sanctions are limited to primary sanctions, as long as your downstream company avoids any economic ties with the US and ensures that its transactions do not violate US economic sanctions, the transaction risks with the downstream company are relatively low.However, please note the following points:

Business Reputation:

Even if your company is not directly sanctioned, conducting transactions with sanctioned entities may damage your companys business reputation.Sanctions of Other Countries:

In addition to the US, other countries and regions (such as the EU) may also implement Russia - related sanctions. This may have an impact on your companys international business.Risk Assessment:

It is recommended that your company conduct a detailed risk assessment and consider consulting professional legal advice to ensure that your companys decisions are based on sufficient information.In conclusion, conducting transactions with sanctioned entities may bring certain risks. It is recommended that your company conduct sufficient investigations and consultations before making decisions.

Discussion on the Risks of US SDN Sanctions and Enterprise Cooperation | Shanghai Import/Export Agent