What is the Global Magnitsky Human Rights Accountability Act?
The Global Magnitsky Human Rights Accountability Act is a U.S. law enacted in 2016 designed to address human rights abuses and corruption on a global scale. It empowers the U.S. to freeze assets, deny visas, and block transactions of foreign individuals or organizations involved in significant human rights abuses or acts of corruption, regardless of where they occur.
Why was the Global Magnitsky Human Rights Accountability Act Created?
The Global Magnitsky Human Rights Accountability Act was created to address widespread concerns over impunity for human rights violations and corruption on a global scale. It emerged from the case of Sergei Magnitsky, a Russian tax attorney who was arrested, tortured, and died in a Moscow prison in 2009 after uncovering a $230 million fraud involving Russian government officials. His death sparked international outrage, and highlighted the need for mechanisms to punish human rights abusers and corrupt officials worldwide.
The U.S. Congress recognized the limitations of existing laws that were country-specific or lacked the scope to address individual perpetrators of gross violations of human rights and acts of significant corruption. The Global Magnitsky Act provides a tool to impose visa bans, asset freezes, and other financial sanctions on individuals and entities anywhere in the world involved in such activities, thereby promoting accountability and serving as a deterrent.
It sends a strong message that the United States will not be a safe haven for those who commit egregious acts, and it seeks to encourage other nations to adopt similar measures.
Who has to Comply with the Global Magnitsky Human Rights Accountability Act?
This should be regarded as a universal law. Any individuals or entities involved in significant human rights abuses or corruption, especially those with ties to the United States, are subject to sanctions. Therefore, businesses must ensure they do not inadvertently engage with sanctioned parties.
How will the Global Magnitsky Human Rights Accountability Act Affect Businesses?
The Global Magnitsky Act affects all businesses by imposing due diligence and compliance obligations to avoid inadvertent engagement with sanctioned individuals and entities. This should include implementing robust compliance programs, conducting thorough vetting of partners and suppliers, and maintaining accurate records to avoid any association with sanctioned entities.
What are the Penalties for Noncompliance with the Global Magnitsky Human Rights Accountability Act?
The Global Magnitsky Human Rights Accountability Act allows the U.S. government to impose several specific penalties on foreign individuals and entities involved in serious human rights abuses or corruption, including:
- Asset Freezes: The U.S. can freeze the assets of foreign individuals and entities that are under U.S. jurisdiction. This means any property or interests in property within the U.S. or in the possession or control of a U.S. person cannot be transferred, paid, exported, withdrawn, or otherwise dealt in.
- Visa Bans: Individuals can also be denied entry into the United States. This includes revoking existing visas and denying applications for new visas.
- Prohibitions on Business Dealings: U.S. persons are generally prohibited from engaging in any transactions with sanctioned individuals or entities. This includes financial transactions, trade, and other business activities.
These penalties aim to exert financial and social pressure on those targeted by the sanctions, limiting their access to global resources and international channels. The act is designed to hold accountable those who are directly responsible for or complicit in human rights abuses or corruption, even if these individuals are located outside of the United States.
How do you Comply with the Global Magnitsky Human Rights Accountability Act?
Compliance with the Global Magnitsky Human Rights Accountability Act primarily involves ensuring that individuals and entities under U.S. jurisdiction do not engage in transactions with those who have been sanctioned under the Act.
Here’s how to ensure compliance:
- Continuously monitor and screen against the U.S. Treasury’s Office of Foreign Assets Control (OFAC) list of sanctioned individuals and entities. This list is updated regularly, so continuous vigilance is required to ensure that no transactions are inadvertently made with a sanctioned party.
- Conduct thorough due diligence on all business partners, especially in international transactions or in regions with a higher risk of human rights abuses or corruption. This includes understanding the ownership structure and key stakeholders of the companies you do business with.
- Establish and maintain a robust compliance program that includes internal controls designed to prevent and detect any potential violations of U.S. sanctions. Training employees on these compliance protocols and the importance of sanctions compliance is crucial.
- Maintain transparent records of all transactions and be prepared to demonstrate compliance efforts to U.S. regulators if required.
There are no specific due dates related to ongoing compliance with the Global Magnitsky Act, as the responsibility is continuous and based on the current status of the OFAC sanctions list. Businesses must stay informed of any updates to the list and adjust their activities accordingly to remain in compliance at all times.
How can Craft help?
Craft’s supplier risk management solutions are designed to streamline compliance and enhance reporting. With our platform:
- Identify risky suppliers with in-depth company profiles and easily scalable due diligence
- Continuously monitor your supplier network for changes and potential violations
- Document your efforts for proof of compliance
- Collaborate and share information across teams for faster risk mitigation
Related Regulations
U.S. Foreign Corrupt Practices Act
EU Global Human Rights Sanctions Regime
UK Sanctions and Anti-Money Laundering Act 2018
Office of Foreign Assets Control (OFAC) Sanctions
Conclusion
The Global Magnitsky Human Rights Accountability Act represents a crucial tool in the fight against global human rights abuses and corruption. For procurement and supply chain professionals, understanding and complying with this Act is essential to avoid sanctions and maintain ethical business practices. By implementing effective due diligence procedures, training staff, and leveraging technology like Craft’s solutions, businesses can navigate the complexities of international sanctions and uphold their commitment to human rights and anti-corruption.
For a comprehensive overview of regulations affecting global supply chains, visit our compliance hub.