Hall & Wilcox handbook: your guide to the Australian sanctions regime
In this handbook, we summarise the Australian sanctions regime as at March 2025. We hope it assists you and your business navigate this difficult and ever-changing area.
If you would like to know more, or obtain advice on sanctions issues, please do not hesitate to reach out to the Hall & Wilcox sanctions team: Chris Sacre, Kendall Messer and Charlotte Young.
Introduction to Australia’s Sanctions Regime
Sanctions are measures not involving the use of armed force imposed in situations of international concern, including the grave repression of the human rights or democratic freedoms of a population by a government, or the proliferation of weapons of mass destruction or their means of delivery, or internal or international armed conflict.
Australia’s Sanctions Regime is administered by the Department of Foreign Affairs and Trade, Australian Sanctions Office.
Australia implements:
Australian autonomous sanctions
- Australian autonomous sanctions are made as a matter of foreign policy, by the Australian Government of the time, and may supplement the United Nations Security Council sanctions or be separate from them.
- Australian autonomous sanctions are in place in relation to the Former Federal Republic of Yugoslavia, Myanmar, Russia/Ukraine, Zimbabwe, and also issue-based sanctions for serious corruption, serious violations or serious abuses of human rights and significant cyber incidents.
United Nations Security Council (UNSC) sanctions
- These sanctions are provided for by the United Nations Security Council and as a member of the UN, Australia imposes them.
- UNSC Sanctions are presently in place in relation to the Central African Republic, Democratic Republic of the Congo, Guinea-Bissau, Iraq, Lebanon, Mali, Somali, South Sudan, Yemen, and also issue-based sanctions for counter-terrorism, the Taliban, ISIL (Da’esh) and Al-Qaida.
Both the UNSC sanctions and Australian autonomous sanctions are in place in relation to the Democratic People’s Republic of Korea, Iran, Libya and Syria. Together we refer to these two sanctions regimes as Australia’s Sanctions Regime.
Indirect effect of geo-political tensions on business dealings
Sanctions are utilised to place financial pressure on nations, entities, or individuals whose conduct is of concern to Australia or globally. Sanctions therefore respond to the geopolitical environment.
The introduction of sanctions, overall geopolitical environment, and attitude towards certain countries can affect the business dealings of Australian businesses. The impact can be:
- direct – such as where a contractual counterparty or commodity has been sanctioned; or also
- indirect – for example where a nation is targeted by sanctions, banks may adopt their own policies preventing payment to or from that nation even if the specific contract or payment does not breach Australia’s Sanctions Regime.
Australia’s Sanctions Regime is regularly updated in line with global geopolitical events. Some recent examples include:
- North Korea: In May 2024 Australia joined its international partners in introducing further sanctions on North Korean entities associated with supplying arms and related materiel to Russia.
- Middle East: In response to tensions in the Middle East, several persons and entities have been added to the consolidated list of designated persons and entities in respect of Iran and Iran’s nuclear program and human rights abuses.
- Russia: The Australian Government has steadily increased sanctions since 24 February 2022 in an effort to bring about an end to the war in Ukraine. The Russia sanctions are broad, in some instances complex, and continue to evolve.
- Iran: Since October 2023, the Australian Government has introduced targeted sanctions for designated persons and entities in response to mounting conflict in the Middle East and Iran’s missile program and human rights abuses. New designated persons meeting the Iran criteria have been added as recently as 16 October 2024.
Sanctions updates and announcements are shared by the Minister of Foreign Affairs and posted on the Minister for Foreign Affairs website, following legislative amendment taking place. Such sanctions announcements are generally rapid Australian Government responses to changing global geo-political conditions.
Monitoring these updates is crucial, as business activities that were previously not in breach of the Australian Sanctions Regime can become at risk of a breach overnight.
Hall & Wilcox carefully monitor legislative amendments to Australia’s Sanctions Regime and introduction of new sanctions or the addition of new designated persons or entities to the Consolidated List.
Does this impact you?
Australia’s Sanctions Regime applies to:
- Australian citizens, whether engaging in conduct in Australia or internationally;
- Australian companies, whether engaging in conduct in Australia or internationally; and
- conduct engaged in by any person in Australia
Because Australia’s Sanctions Regime applies to both businesses and individuals, company directors can also be liable for a company’s breach.
Australia’s Sanctions Regime restricts the:
- import, export, supply, purchase, or transport of certain goods;
- provision of certain services and commercial activities; and
- providing or dealing with the assets of designated person or entities and their travel to Australia.
Sanctions breaches – what can you be liable for?
Designated persons or entities
It is sanctioned to directly or indirectly make an asset available to, or for the benefit of, a designated person or entity. All designated persons or entities are recorded on the Consolidated List.
This is a sanction with broad reach and may include:
- conduct that occurs through an intermediary;
- a supply to an immediate family member of a designated person or to an entity whose shareholder is a designated person or entity; and
- actions taken even if there was no knowledge or intention that the conduct would benefit a designated person or entity.
The Consolidated List of designated persons and entities is regularly updated, and should therefore be regularly reviewed.
Import or purchase
There are specific laws for different countries restricting the import or purchase of certain categories of goods. For example, it is prohibited to import or purchase:
- ‘all goods’ from a Specified Ukraine Region (Donetsk, Luhansk, Crimea and Sevastopol);
- rare earth minerals (including gold and titanium), coal, copper, iron ore, lead ore, seafood, textiles and certain machinery, electrical equipment, or agricultural products from North Korea (the full list is extensive); and
- petrochemical or crude oil products from Syria.
Businesses should be especially vigilant to check the geographical locations of all goods and companies in their supply chain.
Sanctioned supply
Similarly, there are restrictions on the supply of goods to certain countries. For example, it is prohibited to supply:
- goods falling within AHECC tariff codes 8207, 84 and 85 to, or for use in, or for the benefit of Russia, or goods for oil exploration and production in the Russian Exclusive Economic Zone and Continental Shelf to Russia;
- certain luxury goods to Russia and North Korea; and
- any goods on control lists relating to Nuclear or Missile concerns or certain kinds of graphite, raw or semi-finished metals or industrial process software to Iran.
Businesses should ensure that they can identify the end user of any export product and seek legal advice as to whether they are directly or indirectly making any such supply.
Sanctioned services
Outside of the import or export of physical goods, it is also sanctioned to supply certain services relating to those goods.
It is prohibited to provide the following service if it assists with or is provided in relation to a sanctioned supply:
- technical advice, assistance or training;
- financial assistance;
- a financial service including insurance or reinsurance services; or
- another service.
‘Another service’ is a notably broad description. Hall & Wilcox recommend that you review whether any of your services may relate to a sanctioned good, and, if you have any concerns, seek legal advice.
Sanctioned commercial activity
The prohibition on engaging in sanctioned commercial activities are complex and technical. This prohibition can relate to:
- dealing with, bonds, equity, transferable securities, money market instruments or other similar financial instruments issued by a Specified Entities (entities specified by the Minister) with a maturity period of more than 30 days; or
- making, or being part of an arrangement to make, loans or credit to a Specified Entity and has a maturity period over 30 days; or
- using or dealing with an asset, or allowing or facilitating another person using or dealing with an asset owned or controlled by a designated person or entity including selling or moving assets.
Thorough due diligence should be undertaken to ensure you are not at risk of sanctions breach if you are undertaking such commercial activities.
Breach of Directors’ and Officers’ duties
Breach of a sanctions law may also amount to a breach of directors’ and officers’ duties according to the Corporations Act 2001 (Cth) or at common law.
How to protect yourself or your company
Due diligence defence
Australia’s Sanctions Regime contains a due diligence defence that will protect a company from committing a sanctions offence if the company can prove that it took reasonable precautions and exercised due diligence to avoid contravening the sanctions law.
What will be considered reasonable precautions depends on the nature of the breach and the company itself. Hall & Wilcox recommend all companies that have any risk of sanctions breach implement sanctions risk management policies. See our below section ‘What should you do’ for our due diligence recommendations.
Permits
The Australian Government recognises that sanctions can have an impact on the supply chains and business activities of Australian businesses. In response to this, Australia has implemented a permit system to allow Australian companies to continue their business in certain circumstances (and often with conditions) while maintaining the integrity of the sanctions imposed.
To make use of this permit system, businesses can apply for a permit that allows them to carry out the business activities described in the permit. A permit should be sought where the activities that the business proposes to carry out would otherwise breach Australia’s sanctions laws. The Australian Sanctions Office has extended its time to consider permit applications from six to eight weeks, to now three months. In our experience a considerably longer period may be required depending on the nature of the permit.
There are also ‘general permits’ available that apply to the class of persons described in the permit as the ‘permit holder’ and provide a blanket authorisation for certain activities. These permits include:
- SAN-2024-00140 – which is an Intellectual Property Rights permit that authorises making certain assets available to persons or entities in connection with the protection of intellectual property; and
- SAN-2024-00138 – which is a permit that authorises the use of, or dealing with, controlled assets in connection with legal services, settlement of legal proceedings and payment of legal costs.
The available general permits are extremely specific, and the activities permitted are confined to what is expressly permitted by the permit. Businesses wishing to apply for or make use of a permit are recommended to seek legal advice.
What should you do?
Australia’s Sanction Regime is agile and amendments in response to global geopolitical events can be swift. The Senate Foreign Affairs, Defence and Trade Reference Committee has recommended that Australia move even more quickly to implement sanctions and align with its allies.
It is therefore important to have robust sanctions compliance protocols in place both:
- to prevent any potential sanctions breach; and also
- to establish that reasonable precautions were taken for the purpose of the due diligence defence should a breach occur.
Hall & Wilcox recommend a protocol that provides for:
- regular review of the Department of Foreign Affairs Sanctions webpage to understand the extent of Australia’s Sanctions Regime and identify whether and how it may impact you;
- if you are dealing with any of the following countries or individuals or entities in those countries review the sanctions regime for that country:
- a notification process for any person to follow should they become aware of a potential sanctions risk. For example, a specified person within the company who should be notified, and a protocol that person must follow including further notification to company executives.
- regular review of the consolidated list against contracting entities, all parent companies in the organisation structure, and any shareholding individuals both at the time of contracting, and throughout the life of the contract.
- review of all existing contracts for sanctions clauses to ensure that the risk of breach of contract is minimised, including insurance policies;
- review of cancellation and force majeure provisions in existing contracts;
- conducting due diligence to understand exactly how products and services are being used, for what purpose, by who, and for whose benefit;
- reviewing the use of offshore clearing processes, particularly in jurisdictions that may impose different sanctions causing delay in payment;
- thorough due diligence processes for sanctions risk review when entering into a new contract.
Note that it is not sufficient for a sanctions due diligence protocol to exist, but it must also be implemented and used; this may involve employee education to identify risks and what to do if a risk is identified.
The best way to ensure that you or your company do not inadvertently breach the Australian Autonomous Sanctions Laws is to have a good understanding of the law in this area and the scope of your operations, failing which to seek legal advice on your business operations and sanctions risks.
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