-By Karl Yuen
Sanction seems far away from us. However, it is important to comprehend their nature and refrain from being sanctioned or engaging in business with those sanctioned. Sanctions are measures that countries or international organizations take to restrict or prohibit certain activities, transactions, or relationships with specific countries, entities, or individuals. These measures are usually taken in response to violations of international law, human rights abuses, or actions deemed to threaten national or international security. However, sanctions can also have unintended consequences, such as humanitarian or negative impacts on innocent individuals or companies. Sanctions can be lifted if the targeted country or entity takes steps to address the underlying issues that led to the sanctions being imposed. However, the effectiveness of sanctions is often debated, and they can sometimes be counterproductive or fail to achieve their intended goals. Therefore, governments and citizens alike must ensure that any sanctions imposed are done so in a fair and just way.
As defined by the UK’s Office of Financial Sanctions Implementation, financial sanctions refer to restrictions to achieve a specific foreign policy or national security objective. They target individuals, companies, organizations and countries identified to have violated critical laws to achieve specific foreign policy or national security objectives. Financial sanctions aim to encourage those who have committed wrongdoings to change their behaviours and comply with international laws or face severe consequences. It may include restrictions on access to financial services and markets, freezing assets and funds, prohibiting certain types of transactions, and restricting the provision of economic resources. Implementing and enforcing these restrictions require a collaborative effort between government agencies and organizations such as customs, defence, finance and law enforcement.
Sanction can be categorized into two types. For targeted sanction, it only bans transactions related to particular goods or services with specific sanctioned entities or individuals or applies to respective industries or sectors of a country’s economy, such as its financial services and mining industry; For comprehensive sanction, it prohibits nearly all business transactions with a particular country or region.
Financial sanctions are increasingly being used as an effective tool to maintain international security and stability and protect people from the potential risks of financial crime. In addition, both types of sanctions effectively send a strong political message that could influence the behaviour of the sanctioned parties.
Implementing sanctions provides several advantages, including the ability to target specific individuals or organizations, a cost-effective solution for governments, and the potential to influence behaviour in countries worldwide. Firstly, the measures taken to carry out an appropriate financial sanction are usually effective in achieving its aims. The imposition of financial sanctions can increase relevant parties’ costs by freezing their assets and blocking their access to funds and services. Thus, these sanctioned parties might consider changing their behaviours in exchange for removal from sanctions. Secondly, a sanction can avoid a catastrophic impact on lives and societies because it is an alternative to violent actions, such as wars. Thirdly, a sanction is less costly and more efficient to enact. The sanction lists can be amended quickly and relaunched in a short time.
Although financial sanctions are a popular way to punish and discourage certain behaviours, sometimes it cannot address the underlying problem and provide any solutions for resolving the core issues that led to the behaviour. It only offers a short-term solution and often targets individuals rather than institutions or organizations responsible for perpetuating a systematic problem. Ultimately, financial sanctions can only bring some relief in the short term or only focus on the person itself or sometimes it brought unintended consequences.
One example of financial sanctions is the ongoing sanctions imposed on North Korea by the United Nations and various countries. These sanctions were imposed in response to North Korea’s nuclear weapons program and other activities threatening international security. The sanctions include restrictions on trade, financial transactions, and travel to and from North Korea. Companies and individuals who violate these sanctions risk having their assets frozen and facing criminal charges. These sanctions have been in place for several years and have significantly impacted North Korea’s economy and its ability to fund its nuclear program. However, the effectiveness of these sanctions in achieving their intended goals is a subject of debate, and they have also had unintended consequences, such as negative impacts on North Korean citizens and difficulties in delivering humanitarian aid.
But the fact is that we still need to pay attention to sanctions, although they sometimes cause unintended consequences. We will likely see more sanctions imposed in the future as more people strive for a fair and incorruptible world. As citizens and businesses, it is our responsibility to adhere to the standards of behaviour and conduct that have been established to ensure compliance with international laws and regulations. We must educate ourselves on the nature of sanctions and take steps to avoid being sanctioned or engaging in business with those who have been sanctioned. While sanctions can be an effective tool to maintain international security and stability, we must also be mindful of their unintended consequences, such as negative impacts on innocent individuals and companies. Our intention should be directed towards understanding how sanctions function rather than trying to derive any advantages from them. By working together and striving for a fair and just world, we can create a more peaceful and prosperous future for all.