Associate Menelaos Karampetsos penned an article for Financier Worldwide Magazine's September issue examining the sanctions enacted by the G7 following Russia's invasion of Ukraine and their impact on businesses.
The article, entitled "Sanctions against Russia: a Gordian knot for business," noted that, despite the initiatives designed to target Russia's ability to wage war against Ukraine, members of the G7 have diverged in terms of the type of sanctions they have introduced.
The European Union banned legal advisory services provided to the Russian government or legal persons, entities or bodies established in Russia. The U.K. banned the provision of such services to any non-U.K. persons only if such services related to activity prohibited under the U.K.'s sanctions regulations.
This divergence makes it increasingly difficult for multinational entities or those that deal with them to establish what is prohibited, Karampetsos wrote.
"Sanctions are just a specific area of law within a given country's legal system and, as such, they continue to interact with other areas of law, such as human rights law, which impact how an asset or economic source can be dealt with," Karampetsos wrote. "Members of the G7 have, by and large, failed to follow through on such considerations."
There has also been an uptick in de-risking, especially at multinational financial institutions, which have significantly restricted their offerings to clients associated with Russia out of concern for navigating and complying with an increasingly varied array of sanctions, he wrote.
The agencies tasked with administering sanctions outside the U.S. historically are understaffed, and as a result, they were ill-equipped to address the numerous queries by affected individuals and businesses. The infrastructure to support the administration, oversight and enforcement of sanctions simply was not there, Karampetsos wrote.
"For sanctions to work effectively, it is imperative that businesses get the guidance they need from governments and that governments acknowledge the commercial realities of competition with countries which do not implement Russian sanctions," he wrote. "If sanctions are the new world order, then new rules and resources are needed, including, for example, around the process for application and review of licenses and authorizations or the formal harmonization of certain rules around issues such as determining ownership or control by sanctioned individuals or entities."
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