Who must comply?
Australia’s sanctions laws apply to Australian citizens anywhere in the world; to any other person as long as they are within Australia; to conduct on Australian ships and aircraft; or where the results of the conduct occur in Australia (even if the conduct itself occurs outside of Australia).
Some exemptions apply. Notably, impacted individuals and businesses can seek sanctions permits. A sanctions permit is an authorisation granted by the Minister for Foreign Affairs (or their delegate) to undertake an activity that would otherwise be prohibited by Australia's sanctions laws. Various criteria must be met to obtain a sanctions permit, and such permits, if granted, are typically highly specific and subject to conditions.
In its latest guidance, ASO also states that sanctions permits are 'generally appropriate only where there is a clear likelihood of a sanctions contravention occurring'. In other words, ASO considers that 'broad and non-specific sanctions risks' are better managed through adopting reasonable precautions and due diligence measures (and not by attempting to use sanctions permits as a blanket means of mitigating sanctions risks). Sanctions permits also cannot be granted retrospectively. The Minister has granted several general permits that authorise some activities that would otherwise be prohibited (for example, permitting lawyers to deal with controlled assets of designated persons in connection with providing legal services).
What are the penalties for non-compliance?
A contravention of sanctions laws is a strict liability offence. This means that intention is not relevant to determining if a contravention took place, although a due diligence defence is available. Penalties include:
- for an individual - up to 10 years in prison and/or a fine of 2,500 penalty units ($825,000 as of the time of writing) or three times the value of the transaction(s) (whichever is the greater)).
- for a body corporate – a fine of up to 10,000 penalty units ($3.3 million as of the time of writing or three times the value of the transaction(s) (whichever is the greater)).
New guidance notes
As flagged above, ASO recently released the following new guidance notes:
- Sanctions compliance for Australian Government agencies and employees. This guidance note provides information about key sanctions risks faced by (and possible mitigating measures that can be adopted by) Australian Government agencies. For example, when providing humanitarian aid, undertaking research and engaging in multilateral capacity-building.
- Dealing with assets owned or controlled by designated persons and entities. This guidance note provides information on how to deal with assets that are owned or controlled by designated persons or entities. It touches on reporting requirements and how to determine the upstream ownership and control of an impacted asset. Relevantly, the guidance note stipulates that ownership does not only relate to legal title. Rather, it may also be indicated by a designated person or entity's right to 'exclusively enjoy, destroy, alter, alienate or dispose of, or maintain and recover possession of the asset'. Control, by contrast, can be indicated by a designated person or entity's command or direction over the impacted asset – e.g., through possession of the asset or the ability to dictate how it may be dealt with in comparison to other persons or entities. The guidance does not reveal whether a particular percentage ownership is indicative of ownership or control.
- Financial transactions involving designated persons and entities. This guidance note provides information on concepts relevant to sanctions compliance in financial transactions.
- Import, purchase or transport of firearms and other ‘arms or related matériel’ from sanctioned countries. This guidance note provides information to individuals and entities considering the import, purchase or transport of weapons (including firearms), ammunition, spare parts, accessories or other goods with possible military applications into Australia. It sets out a 'three-step' test for assessing whether a good falls under the definition for 'arms or related matériel'.
- Reporting a sanctions contravention. This guidance note provides information as to how members of the public can report sanctions non-compliance to ASO. It flags that the ASO adopts a ‘graduated-risk based approach’ to sanctions compliance, meaning that the severity of ASO’s enforcement actions will be proportional to the risk and nature of the non-compliance.
- Sanctions compliance for universities. This guidance notes provides information about key sanctions risks faced (and possible mitigating measures that can be adopted) by Australian universities, for example, that arise when enrolling students, employing staff, and/or engaging in research collaborations with persons and entities from sanctioned countries.
As mentioned, several existing guidance notes were also updated. These include: Digital Currency Exchanges, Cyber sanctions and related FAQs, Common High Priority Items for Russia, Australian export sector, Russian sanctions evasion methods and DPRK information technology (IT) workers.
Sanctions Compliance Toolkit
In addition to the new guidance notes, ASO has released a Sanctions Compliance Toolkit (SCT), which outlines key principles, risk management strategies, and best practices that individuals and businesses can adopt to help ensure that they do not contravene Australia’s sanctions regime. We have provided further information below.
Approach to identifying sanctions risks
The SCT provides an overview of Australia's sanctions laws, provides case studies about whether certain activities would breach Australia's sanctions regimes, and also sets out a structured approach to identifying and managing sanctions risks. We set out further detail on these points below.
Firstly, ASO has suggested businesses use a structured approach to identify sanctions risk outlined below.
