Swen Scholtyssek / »The increasing importance of compliance« / HANSA-Forum 2018

Managing risks – 

The increasing 

importance 

of compliance 

22nd Hansa-Forum, Nov. 22, 2018 

— 

Swen Scholtyssek 

Partner, KPMG Law

Managing risks – the increasing importance of compliance 

Besides trade barriers, the consequences to the worldwide trade volume and increasing 

environment protection standards, there are some some compliance-related trends which 

require attention and should remain in scope for the maritime and maritime related business 

There are three main topics where we see threats 

for the business: 

1. New European AML regulation 

2. Increased Anti-Corruption enforcement 

3. Sanctions and the risks when complying with them 

© 2018 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a member firm of the KPMG network of independent member firms 

affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The name KPMG and the logo are registered trademarks of KPMG International. 

2

New European 

AML Regulation

Anti-Money-Laundering 

Why is it important? 

— AML/CTF Anti-Money Laundering / Counter Terrorism Financing 

— New regulation: 6th Anti Money Laundering Directive 

— Customer screening required on payments from 10.000 € 

— It is not sufficient to depend on bank-side screenings 

— Applicable to companies trading in goods 

— Severe penalties and fines 

— Reputational damage 

— management board is also liable 

How can it be ensured? 

— Know your customer : Screening necessary 

— You must have a Compliance Management System 

— Do not underestimate reputation risk 



4

Increased 

Anti-corruption 

enforcement

Corruption perception Index 2017 

Source: 

Transparency International: https://www.transparency.org/news/feature/corruption_perceptions_index_2017. 



6

Anti-corruption 

— Corruption is a worldwide problem 

— Even strong economies are affected 

— Powerful enforcements are in effect 

— FCPA - Foreign Corrupt Practices Act (since 1977) 

— UK Bribery Act (since 2010) 

— French Sapin II (since June 2017) 



7

FCPA 

Enforcement: 

— US Department of Justice (DOJ) 

— US Securities and Exchange Commission (SEC) 

Applies to: 

— Primary: to US SEC-listed companies 

— Any other company in the world which allows any 

“actions to promote corruption in the territory of the 

United States”, 

— Therefore very low level necessary: 

— Transactions through US bank accounts /CHIPS 

(Clearing House Interpayment System) 

— Related phone calls on or e-mails sent from, to or 

trough US-territory 



8

FCPA 

Requirements: 

— Foreign officials (every natural and legal person) 

outside the US 

— No matter what level 

— Intention of bribery 

— Financial or other advantage to the foreign official 

Charges: 

— Any individual involved may face a prison sentence 

— Million dollar fines for companies 



9

FCPA 

In 2017, nearly 2.5 billion USD were paid in fines: 

— Telia Company (Uzbeskistan) – 

paid 935 million USD 

— Keppel Offshore & Marine (Brazil, Singapore) 


— SBM offshore (Brazil, Iraq and other countries) 


— United Technologies Corporation (Azerbaijan, 2018) 

paid 13.9 million Euro 



10

UK Bribery Act 

“The toughest anti-bribery legislation in the world” 

— Comparable regulation to the FCPA, but much tougher 

— Requires a “close connection” to the United Kingdom, e.g. UK citizenship, habitual residence, 

a legal entity was founded under UK laws, any subsidiary of a UK company, trading goods 

from or to the UK 

— Contains “facilitation payments” 

Liability of the management and company 

— Personal liablity of the management: 

Even if the management did not bribe themselves, it can be held responisble, 

if they agreed to or tolerated the bribe (“senior officer”) 

— Liability of the company: 

Responsibility for the actions of “associated persons” (employees or even third parties). 

Liabilty for bribery or attempted bribery can occur anywhere in the world if there 

is a “close connection” to the UK. 



11

Sanctions

The most important sanctioned countries 2018 



13

Sanctions – different types 

Country 

related sanctions 

— Targeting to weaken 

the economy of a 

country 

— To affect the whole 

country 

— Export/import and 

trade prohibited 

— No financial 

transactions allowed 

— Freezing of foreign 

assets 

Person 


— Targeting individual 

legal and natural 

entities 

— So-called Specially 

Designated Nationals 

— Are on sanction lists 

(“SDN-list”) 

— Prohibition of any 

services or the 

arrangement of 

services with these 

entities 

— No payments to or 

from these entities 

— No maintenance of 

the client-relationship 

Goods 


— Sanctions related to 

special goods 

— Might involve 

weapons, military and 

nuclear goods 

— Dual-use goods, 

goods that can be 

used for civil or 

military purposes 

— Regulated by several 

international or 

national treaties or 

laws 



14

Sanctions 

— Significant increase of financial sanctions and trade embargoes over the last few years 

— The most important sanctions are imposed by the United Nations, the USA and the 

European Union 

— Other countries (e.g. Russia) impose sanctions, but they are not covered here 

— Reasons for sanctions are political and economical 

What can happen if you comply with or neglect US sanctions? 



15

US Sanctions against Iran 

History of Iran sanctions 

— Iran was sanctioned for several years due to terrorism and its nuclear program 

— JCPOA (2015) - lifted many, but not all sanctions 

— New US Government 

— One-sided-cancellation of the JCPOA in May 2018 by the US 

— EU keeps nuclear deal in effect, issues EU-blocking order 

— End of the wind-down-periods on Nov 4, 2018 

— Full US-sanctions are in effect 

What does this mean? 



16


US Sanctions are clustered in 

Primary sanctions 

— Typically economic sanctions 

— Primary addressed to US-persons (UScitizens, 

green card holders, US-entities 

based in the USA , their foreign 

subsidiaries and branches) 

— There must be a nexus to the USA, like 

goods (from 25% US-content), persons 

and US-currency 

— US nexus is existent if a transaction is 

done in US-Dollar or a US-person was 

involved in the process of a business 

decision 

— Primary sanctions can affect non-USpersons 

if they are a contributory for the 

sanction violation of the US-person 

Secondary sanctions 

— Annex to primary sanctions to raise 

effectiveness 

— Addressed to entities and individuals who 

don’t have a geographical or financial 

nexus to the US, but who have business 

relationships with sanctioned parties 

— Violators might become sanctioned too if 

they violate US-sanctions and may be 

listed on the “Foreign Sanctions Evaders”- 

List (FSE) 

— Case-by-case decision by OFAC 



17


What do the US sanctions against Iran prohibit? 

— No trade with Iran or Iranian entities, or with third parties related to Iran 

— No transactions with Iran entities 

— No recapitalisation with Iranian banks or financial institutions 

— No business with shipping companies from Iran 

— No shipping of Iranian goods or on vessels under Iranian flag 

— No docking or mooring of vessels in Iranian harbours 

— Even in the case of damage, docking in an Iranian harbour might be an issue 

— If US-insurance companies are involved, the insurance cover might be at risk 

So what do you do? Follow the 

US-sanctions? 



18

US Sanctions vs. EU-Blocking Order 

Problem: 

The EU-Blocking statute 

Reason: 

Contents: 

Addresses: 

Keep the JCPOA in effect - for the remaining countries 

— The prohibition to follow US sanctions 

— All legal judgements issued in a third country (such as from US courts) are 

declared void and do not have to be followed by EU operators 

— So-called EU operators: all natural and legal entities who are citizens of or 

registered within EU 

— All shipping companies ouside the EU, if they are controlled by a EU-person 

— All natural persons who are on EU-soil 

— EU operators can recover "any damages, including legal costs, caused by 

the application of the laws specified in its Annex or by actions based thereon 

or resulting therefrom” 

— Penalized if violated 



19

Conflict for affected entities 

If they follow the US sanctions 

against Iran, they might: 

— Break EU and national / local 

laws 

— Face fines from the EU 

— Face civil claims due to national 

laws 

— Have to report possible damages 

resulting from the US sanctions 

to the EU-Commission 

If they follow The EU-Blocking 

Statute, they might: 

— Face the (high) risk of being 

sanctioned by the US 

themselves 

— Face imprisonment 

— Be fined by OFAC up to million of 

USD 

— Face freezing of their US assets 

and bank accounts 

— No business possible in the USA 

— But: receive compensation from 

the EU (probably) 



20

Conflict for affected entities 

(Partial) Solution: 

— Application to the EU-Commission possible 

— EU-Commission might allow compliance with 

the US sanctions 

— Very complicated procedure 

— No fast solution 

— Check your contracts with Iranian entities to 

see if there are applicable sanctions clauses 

which might help you to find a possible 

solution for civil actions 



21

Thank you 

for your attention

Contact 

Swen Scholtyssek 

Lawyer 

Partner 

Compliance, Governance, Organisation 

T +49 40 3609 9457 43 

M +49 40 3609 9455 30 

F +49 151 22681500 

sscholtyssek@kpmg-law.com 

KPMG Law Rechtsanwaltsgesellschaft mbH 

Ludwig-Erhard-Straße 11-17 

20459 Hamburg 

www.kpmg-law.de 

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there 

can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a 

thorough examination of the particular situation. 

© 2018 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a member firm of the KPMG network of independent member firms affiliated with KPMG International 

Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The name KPMG and the logo are registered trademarks of KPMG International.

Swen Scholtyssek / »The increasing importance of compliance« / HANSA-Forum 2018

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