When Sanctions Hit Home

It’s a scenario more companies now face: overnight, a sanctions notice is issued — maybe against the owner, a partner, a subsidiary, or even the country where you do business. Suddenly, contracts collapse, funds are frozen, shipments are rerouted, and partners stop answering calls.

Whether you’ve been formally sanctioned or are caught in the ripple effects of a connected party’s designation, the consequences can be catastrophic. But there are ways to stabilize operations, protect assets, and reposition your business.

This guide walks through a strategic roadmap to managing business disruptions following a sanctions hit.

The Immediate Shock: What Typically Happens

Within hours of a sanctions designation:

• Bank accounts are blocked or flagged
• Customers or suppliers suspend activity
• Insurance, shipping, and logistics contracts may be canceled
• Cross-border payments are returned or frozen mid-transfer
• Internal staff may panic or resign under uncertainty

This creates not only financial loss, but reputational damage and often regulatory scrutiny — even in jurisdictions that don’t formally enforce the sanctions.

Step 1: Get Clarity on the Impact

The first step is a legal and operational audit to understand the scope of the problem:

• Are you personally designated or just associated?
• Are your subsidiaries affected?
• Which jurisdictions are enforcing the sanctions?
• What accounts, contracts, or licenses are impacted?

Engage your internal legal team and compliance officers immediately. If you don’t have in-house support, hire sanctions counsel with cross-border expertise — this is not something your regular corporate lawyer can handle alone.

Step 2: Secure Essential Functions

Protecting the continuity of your operations involves:

• Reconfirming payroll and operational budgets — work with banks to secure temporary exemptions or seek legal options like OFAC’s specific licenses
• Back up digital and operational data immediately
• Reassign key staff roles to mitigate panic and confusion
• Communicate with internal teams carefully — clarify facts and outline a coordinated response

The goal is to stabilize, not scramble.

Step 3: Notify and Reassure Stakeholders

Early and honest communication is critical. Reach out to:

• Suppliers: Confirm your ability to fulfill obligations or seek waivers
• Clients: Explain the situation and propose secure workarounds
• Partners: Offer transparency and alternative structures for collaboration
• Investors: Provide legal analysis, risk mitigation plans, and timelines for resolution

Do not delay this process. The longer you stay silent, the more damaging speculation becomes.

Step 4: Restructure Ownership and Control (If Needed)

One of the most effective tools post-sanctions is divestment or restructuring. If your company is blocked due to ownership by a sanctioned individual (e.g., 50%+ by an SDN), then:

• Reduce the stake of the sanctioned party below threshold
• Appoint independent directors
• Transfer control to neutral entities or third parties
• Implement governance reforms to prove independent operations

Once restructured, you can petition OFAC or relevant authorities to remove the blocked status from the entity — even if the original owner remains sanctioned.

Step 5: Apply for Licenses or General Authorizations

If you’re engaging in:

• Legal services
• Humanitarian transactions
• Asset management not tied to the designated individual

…you may be eligible for a specific license from OFAC or the EU. These licenses allow:

• Payment of salaries
• Continuation of contracts
• Disposal of blocked property
• Legal and audit expenses

These licenses don’t lift the sanctions, but they buy time and flexibility.

Step 6: Adjust Supply Chains and Financial Flows

Rerouting your company’s operations may include:

• Changing banking partners to those with more lenient jurisdictional rules
• Reregistering in neutral countries
• Renegotiating with shippers, insurers, and customs agents to reflect your risk profile
• Identifying “clean” vendors with no links to sanctioned parties

This takes time but is often essential to keep moving forward.

Step 7: Launch a Parallel Reputation Strategy

Sanctions aren’t just legal — they carry a heavy stigma. Clients and partners may assume guilt, even if the sanctions are broad, preventive, or political.

You should consider:

• Hiring PR and crisis communication advisors
• Publishing independent audits or transparency reviews
• Publicly stating reforms or disassociations
• Launching a legal communications campaign that outlines the facts and timeline

This isn’t just optics — regulators also watch how companies respond publicly.

Step 8: Plan for Legal Challenges

Depending on the designation, you may be able to:

• Challenge the sanctions in U.S. or EU courts
• File a petition for delisting
• Sue for wrongful de-risking (especially if you were not directly sanctioned)
• Request internal bank review or third-party arbitration

Winning such challenges requires sustained legal strategy, documentation, and leverage, but many companies have succeeded — especially when demonstrating compliance reform.

Surviving sanctions as a global entity requires more than internal restructuring — it demands legal diplomacy, asset strategy, and compliance reform. Lionel Iruk, Esq., General Counsel at Empire Global Partners, works with multinational corporations to develop survival frameworks that maintain operations, protect stakeholders, and lay the foundation for delisting and reputational recovery.

Long-Term Repositioning

Even if sanctions are lifted, you must rebuild trust:

• Reestablish relationships with financial institutions
• Disclose past exposure and mitigation steps to partners
• Keep your compliance and legal frameworks updated
• Monitor international regulations and travel bans that may still apply

Sanctions relief is a process, not a reset button. The earlier you adapt, the faster you recover.

Sanctions are meant to isolate and cripple — but they don’t have to end your business. With a smart, fast, and coordinated response, you can protect your assets, preserve your workforce, and even emerge stronger.

Don’t delay. Act with clarity. And surround yourself with the right legal, strategic, and financial advisors who understand the system from the inside out.