Sanctions Clauses in Trade Finance
ICC Issues Updated Guidance
Purpose of Guidance Paper
The purpose of this consolidated Guidance Paper is to highlight certain issues arising from the use of sanctions clauses in trade finance-related instruments.
What Are Sanctions Clauses?
Sanctions clauses are provisions in commercial contracts that allow one party to terminate or suspend the contract if the other party is subject to sanctions imposed by a government or international organization.
Why Use Sanctions Clauses?
Some banks have chosen to use sanctions clauses to control legal risks associated with doing business with parties that may be subject to sanctions.
ICC Guidance
The ICC Banking Commission has issued updated guidance to banks concerning the use of sanctions clauses in trade finance-related instruments. The guidance includes recommendations on the following:
- The use of clear and concise language in sanctions clauses
- The importance of定期 reviewing sanctions clauses to ensure that they remain up to date with applicable laws and regulations
- The need for banks to have a robust compliance program in place to ensure that they are not inadvertently violating sanctions laws
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