US sanctions enforcement focus on mergers and acquisitions

Abstract

Sanctions compliance is an increasing challenge facing multinational companies subject to US sanctions laws as companies are trying to achieve well-defined compliance programmes in a rapidly evolving regulatory environment. Further adding to these challenges is the difficulty of conducting due diligence for mergers and acquisitions (M&A) in a pandemic, coupled with the time pressure of performing due diligence on sanctions risks before the deal is done and integrating sanctions compliance processes after the deal has closed. As shown in recent enforcement cases, more and more companies are making disclosures to US authorities of sanctions violations arising out of their M&A activity, and penalties reach millions of dollars. In this paper, the authors explore the types of sanctions compliance violations that arise as a result of M&A transactions and recommend best practices that companies should follow to avoid these complications.