The E.U. Resilience Communication — Interview with Ms. Alina Nedea, DG FISMA, Head of Unit – Sanctions

July 01, 2021
By: Benoit Beaulieu, ACSS Reporter

On January 19th of this year, the European Commission issued a publication effectively titled The Resilience Communication.

The communication puts forth a strategy towards strengthening the euro and improving the resilience of E.U. financial market infrastructures. Part of this discussion concerns the role that E.U. sanctions play in the implementation of this strategy.

Below are some of the key actions relevant to sanctions implementation.

  • Key action 10: In 2021, the Commission will develop a database, the Sanctions Information Exchange Repository, for the prompt reporting and exchange of information between Member States and the Commission on the implementation and enforcement of sanctions.
  • Key action 11: In 2021, the Commission will work with Member States to establish a single contact point for enforcement and implementation issues which have cross-border dimensions.
  • Key action 13: The Commission will set up a dedicated system to allow for anonymous reporting of sanctions’ evasion, including whistleblowing. The system will provide the necessary confidentiality guarantees.

ACSS interviewed Ms. Alina Nedea about the communication.

Alina is Head of Unit – Sanctions, at the Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA). DG FISMA is the Commission department responsible for EU policy on banking and finance.

ACSS: What events, as of late, prompted the creation of this communication and the strategy it details?

Alina Nedea: The geopolitical context has shifted over the past few decades towards more conflictual international relationships. The global economy is increasingly multipolar and the short-term pursuit of unilateral interests by specific actors has undermined effective multilateral cooperation.

In such a context, the E.U. has remained open towards the rest of the world, but to continue to do so, it has to address some vulnerabilities that have become more apparent recently and that could undermine the prosperity and stability of its economy and financial system.

On the one hand, the COVID-19 crisis has emphasized the risks of a global currency regime relying on a single currency, i.e. the U.S. dollar, to pursue financial stability. On the other hand, the withdrawal of the United Kingdom from the E.U., with the ensuing potential divergence of regulatory and supervisory frameworks, may raise financial stability issues for the E.U. given the reliance on U.K. central counterparties (CCPs) for clearing and settling transactions in euro-denominated financial instruments. Moreover, the unlawful extra-territorial application of unilateral sanctions by third countries threatens the freedom and ability of E.U. companies and individuals to undertake legitimate business with other third-countries’ operators as well as inside the E.U. Such practices negatively affect the E.U. economy and restrict the E.U.’s foreign policy.

The Communication’s goal is to provide an answer to the questions raised by the events described above and to make the E.U. economic and financial system more resilient to shocks, including via a greater international role of the euro. In particular, the E.U. has a vital role in shaping the system of global governance and in developing mutually beneficial bilateral relations, while protecting itself from unfair and abusive practices. This goes hand in hand with the E.U.’s commitment to a more resilient and open global economy, well-functioning international financial markets, and the rules-based multilateral system.

ACSS: The communication explicitly mentions the use of cryptocurrencies to evade sanctions. What other sanction evasion tools and techniques, in particular, is the strategy looking to target and disrupt?

Alina Nedea: Our objective is that sanctions are designed and implemented as effectively as possible across all Member States. The development of new sanctions evasion patterns, as we have seen in the maritime industry or in the financial sector worldwide (cf. latest UN Panel of Experts report on DRPK of March 2021), calls for an increased awareness at the E.U. level.

For example, as technology develops, it also provides a means to circumvent existing laws and regulations. Sanctions are not the exception to this general transformation.

This initiative is aimed at getting a better overview of possible circumvention practices and at addressing them. While it is too early to discuss the exact scope of the report, at this stage we can confirm that the study will touch upon the financial aspects of sanctions evasion, but it will not be limited to that. Sanctions evasion through shell companies and in the maritime industry will also deserve special attention.

ACSS: Concerning key action 14: specifically, how will cooperation be strengthened with G7 partners? Does this key action imply increased sharing of information and/or another means to improve sanctions implementation with E.U. allies?

Alina Nedea: As explained in the Communication, the High Representative and the Commission will strengthen dialogue cooperation on sanctions with G-7 partners, to ensure better alignment of decisions on policy and implementation issues, including via information sharing. This allows the E.U. to raise concerns regarding the extraterritorial application of third countries’ sanctions.

With regard to implementation, there is evidence that close cooperation with like-minded countries has helped us deal together with challenges in the past. We want to enhance and, where necessary, restore such cooperation.

ACSS: Can you emphasize the importance of sanctions in maintaining and promoting the strength of the euro globally?

Alina Nedea: It is important to clarify that the Communication does not suggest any links between imposing sanctions and a greater role of the euro globally. As indicated, however, the three pillars of the Communication on the European economic and financial system: fostering openness, strength and resilience are self-reinforcing.

First, increasing the international role of the euro in financial markets and in the trade with other countries will reduce the impact of third-countries’ unilateral sanctions that leverage the strength of their currencies in global transactions and financial markets.

Second, we believe that a more rapid, robust and effective implementation and enforcement of E.U. sanctions will benefit the E.U.’s goal of open strategic autonomy and resilience. For example, the full and uniform implementation of E.U. sanctions will further increase the E.U.’s credibility as a regulatory power and preserve the integrity and the level playing field of the E.U. Single Market.

E.U. sanctions are targeted and provide legal certainty. The credibility of the E.U. as a regulatory power, in sanctions and other policies, will contribute to the adoption of the euro as an international currency. Moreover, promoting the international role of the euro will be per se beneficial to the international financial system, as recent events have stressed the need of a multipolar currency system.

European Conference on Global Economic Sanctions and Export Controls – Highlights and Key Topics

April 23, 2021
By: Benoit Beaulieu, ACSS Reporter

The ACSS held its inaugural European conference on global economic sanctions and export controls last month, discussing Brexit, the E.U., the maritime sector and sanctions screening. Between March 9th and 10th, ACSS members and registrants had the opportunity to learn from an all-star lineup of sanctions professionals while horizon-scanning future developments. They also examined the practical implications and considerations for global sanctions. (more…)

EU Companies Dealing With Iran: Your Frequent Questions Answered by the Due Diligence Helpdesk

March 19, 2021

ACSS asked the EU Due Diligence Helpdesk to answer questions on this new initiative. Below are their answers.

Disclaimer: The answers, views and opinions expressed in this article are those of the EU Due Diligence HelpDesk and do not reflect the policy or position of ACSS. Please get the advice of an attorney before engaging in transactions or business dealings that may involve sanctioned jurisdictions. (more…)

The New U.K. and E.U. Global Human Rights Sanctions Regimes

February 3, 2021
By: Benoit Beaulieu, Content Writer, ACSS

From the global pandemic, the Black Lives Matter movement, documented atrocities in Xinjiang and Myanmar, to repression in Hong Kong and Belarus, 2020 was a year that was unfortunately scarred by human rights violations and abuses. Accordingly, there has been incredible pressure for governments the world over to adequately respond and prevent human rights abuses, with sanction regimes being one of the most important tools at their disposal to do so. (more…)

A Discussion With Sebastiaan Bennink on the Latest Trends in the European Sanctions Sphere

September 25, 2020
By: Jack Walsh, Reporter, ACSS

The Association of Certified Sanctions Specialists recently spoke with Sebastiaan Bennink, a partner at BenninkAmar Advocaten. Sebastiaan is a specialist in the field of economic sanctions and export controls, and his legal practice focuses on all aspects of international trade law and related issues, including money laundering, terrorist financing, fraud, bribery and corruption, and other compliance-related topics. Sebastiaan also regularly represents clients subject to investigation and enforcement proceedings. (more…)

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