FIDI Focus gives the latest guidance for Affiliates whose supply chains involve Russia or Russian companies.
In light of the ongoing conflict in Ukraine and sanctions imposed by the EU, the US, and other countries, companies that trade across international boundaries – including movers – must take into account significant obligations when they are trading with Russian firms.
The first question is: is it OK for FIDI to have Russian Affiliates in its federation? As an international association with headquarters in Belgium, FIDI must – and does – follow EU legislation with regards to sanctions. Currently, this means Affiliates from Russia are permitted within FIDI, subject to the usual qualifying FAIM criteria of course, as well as compliance and screening of EU sanctions.
The second question is more complex: can Affiliates work with Russian companies?
The first advice to Affiliates is that it is their responsibility to consult their own country’s legislation and rules on sanctions before dealing with companies in Russia – or any other sanctioned countries (it is worth noting that FIDI has Affiliates in Russia, but none in other countries that are subject to sanctions, including Iran, Syria, Cuba and North Korea).
Before they enter a service agreement or financial transaction with a Russia-based business, Affiliates must determine whether sanctions in their own country (or in the EU) or any third country (which may be involved in the transaction) outlaw transactions with Russian firms:
- The Russian company or any connected individuals appear on any sanctions lists
- Payments can lawfully be made to or received from Russian counterparts from their own country or bank, and in an acceptable currency (this point may well be policed by the bank/s involved).
Overview of relevant sanctions
Finance
- Payments from/to Russia are currently subject to significant banking restrictions
- Many Russian banks are cut off from the SWIFT payment network, and financial transfers can be blocked by intermediary banks based in the EU, US, UK, or other countries
- If a Russian Affiliate is unable to meet its financial obligations, it risks removal from FIDI under FASI rules
Transport
- EU airspace, seaports, and road networks are closed to many Russian transport operators
- Affiliates must ensure any shipments to or from Russia are routed through approved channels and do not involve sanctioned carriers
Due diligence
Affiliates considering working with Russian firms are advised to take the following steps:
- Screen business partners for links to sanctioned individuals or entities
- Verify payment pathways and ensure funds can be legally transferred in and out of Russia
- Assess involvement of third-country sanctions – a move involving countries other than the origin and destination may add restrictions, for example
- Avoid facilitating sanction breaches – Affiliates must be careful not to use intermediary services, financial bodies, or third-party logistics providers (for example) that could involve a sanctioned party
- Consult national legal and regulatory authorities to stay up-to-date with relevant sanctions updates. The EU Best Practices guidance on sanctions implementation is a useful resource and can be found on the official EU website
In summary, while FIDI is permitted to include Russian firms in its membership, under EU law, the decision and responsibility for engaging with these or any Russian-based entities falls with individual Affiliates.
Due diligence is vital, and Affiliates must make sure they comply with all current national and international sanctions. This is a fluid situation, and companies are advised to watch out for any changes to legislation that may apply to their business.