Part 4: Sanctions Intelligence with Chris Mason

This is part 4 of a special 5-part series featuring Infortal Worldwide. Tom Fox and Chris Mason discuss sanctions intelligence. Chris talks about regulation changes concerning sanctions, their impact on the business community, and reputational risk.

Chris Mason is with Infortal Worldwide, a global risk firm that provides due diligence services to support key investment decision-making. Infortal Worldwide supports a lot of private equity investment, mergers, acquisitions, and any type of risk scenario a business may face.

  • With sanctions, assessing your exposure and taking a holistic view of your business is important. Look at who you’re doing business with, your partners, your client, and your customer base, and then ensure that you have compliance documents that map out what your business program looks like.
  • Navigating the ever-changing international sanctions regimes starts with having a documented, adaptable plan for everyone on your company’s team. 
  • Regulations task forces are looking at companies in this new age of anti-corruption, so having a solid compliance program is crucial. 
  • Reputation is closely tied to a company’s value: if one decreases, so will the other. Violating sanctions laws can taint a company’s image in the eyes of the public. “Circling back to what we’ve been discussing, taking the steps to understand your risk exposure, setting up a plan that you can put in place that’s easy for your team to follow, can help you avoid these types of reputational risks and regulatory problems,” Chris remarks. 


” Sanctions risk management should now be a key consideration for companies of all sizes.”-  Chris Mason 

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About Riskology

Welcome to the show notes for Season One of Riskology by Infortal™.  

Riskology is a podcast that combines the worlds of geopolitics and intelligence with that of business.  Geopolitical risk threatens global trade, supply chain integrity, and corporate reputation unlike anything seen since World War Two. Riskology by Infortal™ is meant to inform, entertain, and cut through the noise of crisis so business professionals can have a clear understanding of their place in the constantly changing global economy. 

The following is a collected transcript of our podcast episodes from our launch through September 2023.  In this season you will: 

  • Gain a summary understanding of geopolitical risk as a problem for business
  • Learn about the power of intelligence and “boot on the ground” to supercharge and safeguard your business operations
  • Obtain greater insight about intelligence to combat corruption and additional costs 
  • Learn about using intelligence to avoid sanctions violations 
  • Secure greater understanding of using intelligence to avoid pitfalls related to ESG risks
  • Learn about protecting supply chain integrity and flexibility with intelligence-based advanced warning and de-risking
  • Take a regional snapshot of the major “regions of risk” today: East Asia, Russia and Ukraine, the Middle East, Latin America, and South Asia
  • Learn about how the future of global business is in fact not in China, but in Eurasia as is less commonly understood
  • And more!

Please note: These transcripts are noted as spoken, and are dated to early Fall 2023.  As such, this season does not include up-to-date information related to unfolding crises such as the October 7, 2023 attack in Israel, radical electoral outcomes in Europe and Argentina, or the looming war between Venezuela and Guyana.  

Please like, subscribe, and share if you like our content!

-The Riskology Team 

Infortal on Global Risk Outlook: Part 2 – Dr. Ian Oxnevad on Latin America

Ian: So, from a due diligence and geopolitical risk intel standpoint, Mexico and Latin America in general don't get enough attention because a lot of CEOs, unfortunately, and people in the political world as well, they kind of view Latin America as off to the sidelines from major events around the world, but it's anything but.

Intro: Companies operating in today's global economy really need to get an understanding of the international geopolitical risk landscape. At Infortal Worldwide, we work with our clients on solving risk before it starts. Welcome to the Riskology podcast. This is a five-part series on geopolitical risk intelligence, where we're looking at managing business risk globally and really understanding the geopolitical risk landscape.

Tom: Hello everyone, this is Tom Fox. Welcome back for part two of our five-part exploration of global geopolitical risk with Ian Oxnevad. Ian, first of all, welcome back.

Ian: Thanks for having me again.

Tom: In today, I wanted to look at Latin America and as a region that is currently changing, I don't want to say almost daily, but almost daily. How do you keep track, and what are you seeing right now in terms of trends for geopolitical risk?

Ian: Well, like most parts of the world, it's a lot less stable than it was before 2020. In terms of keeping track of it, it's a constant struggle, but in terms of macro trends, you see a number of things that are taking place in Latin America, increased statism for one in the economy, corruption, authoritarianism growing, but that's kind of a worldwide thing. And also, just a greater presence of China in Latin America where it didn't necessarily exist before. So, If you're looking at Brazil to start, Brazil is highly divided. It's internally unstable, most recently under the Lula government. It's creating new ties with China, and I think we've spoken before about China working to get countries off of the dollar. China is Brazil's largest trading partner, not the US, and just recently, they decided to do bilateral trade agreements and transactions in their own currencies. Reals in Yuan as opposed to transacting into dollars first. And this goes back to what we spoke about before with the Middle East, where there's efforts to sort of de-couple energy from the dollar. And that creates a number of tensions, a number of problems for US businesses operating in the region. But domestically, in Brazil, obviously Brazil is tied to China for raw materials. Brazil's natural resources empower China's manufacturing, which is in turn empowering China's rise. But Brazil is divided domestically. They had an election not long ago, where the Jair Bol scenario narrowly lost, and you saw pro-Bol scenario protesters storm multiple government buildings, like the National Congress Building, the Supreme Federal Court, and the Planalto Presidential Palace. And it remains polarized. You have sort of competing populisms in Brazil, and that doesn't show any signs of necessarily changing. And obviously China entering the mix, the signals a regional shift tilting towards China, because Brazil's the largest economy in the region, even though Portuguese was only in one country as opposed to Spanish, Brazil carries a lot of weight economically. Elsewhere, if you’re looking at Mexico, for example, Mexico is a logical near-shoring destination for US companies. It doesn't get enough attention in terms of due diligence and geopolitical risk, however, because a lot of CEOs, they kind of look at Mexico, and they think, well, it's close to US domestic markets. It's going to be great to near-shore from China, just put it in Mexico. Well, it's not that simple. Mexico has its own internal dynamics as well. You have nationalization risks, governmental risk to businesses. So just recently, there was an American company called Vulcan Materials, which was a construction company. It had its facilities on the Caribbean coast seized by the Mexican military. And this in part is driven by a political dispute, driven by the AMLO government and his efforts to get materials into a nearby area in Mexico from a disputed facility in order to finish a train project for the tourism industry. But that internal dispute actually resulted in the seizure of this uh construction facility, that belonged to a US company. So, these political divisions in Mexico are obviously going to affect how near-shoring can take place, how it ultimately plays out. And because Mexican politics is tricky and it doesn't get enough acknowledgement as such, it requires good due diligence and geopolitical risk analysis to do that. And part of this is driven also by US initiatives for green energy. It doesn't align with uh Mexico's economy and its in the primacy of fossil fuels in it. But near-shoring is increasing in Mexico. It had a 12% increase of foreign direct investment just from 2021 to 2022. That was an increase by $35 billion. And it's not insignificant as companies are increasingly skeptical about China, not only as a market, but also as a source of production. Crime is a massive issue, obviously under the current AMLO administration. There have been 35,000 truck hijackings, which is significant. That's about $5 billion in annual losses and physical security concerns are often underestimated alongside contract concerns in this connection to corruption. You have the cartels, obviously, but you also have a fair amount of political corruption on its own that is somewhat tied to that. So, from a due diligence and geopolitical risk intel standpoint, Mexico and Latin America in general don't get enough attention because a lot of CEOs, unfortunately, and people in the political world as well, they kind view Latin America as off to the sidelines from major events around the world, but it's anything but.

Tom: We focus on the uh near-shoring and countries in Central America, Guatemala, Costa Rica, Nicaragua, uh perhaps Panama. I've seen numbers of companies looking at Central America as well. Have you seen that? And if so, are the risk in Central America similar or different from Mexico? 

Ian: There similar in the sense that you have some of the same risk stemming from state intervention, the economy, corruption, authoritarian type risks. The crime risks are a little different there, and that's largely the result of the supply chain for drugs and things smuggled into the US. Mexico is closer. So, the farther south you go, the less salient some of those same dynamics become. So, it is a little different even though some of the geopolitical risks are obviously the same. So that's still something that companies need to invest in if they're looking at Central America or the Caribbean for that matter. 

Tom: And once again turning to my favorite industry, the energy industry, I have to drill down into Venezuela. I've done business with Pedevesa many years ago, uh that no longer is the case, and I think that may mirror the US corporate experience. Where do you see the US first of all on the political level, the United States and Nicaragua, but then drilling down perhaps into a little bit deeper level in the Pedevesa is there a chance that to be in opening some of the risks that we've seen doing business in uh Venezuela led to Citgo officers and directors being arrested and held in Communicado for multiple years? How do you assess Venezuela as or at least the potential opening of Venezuela to US businesses? 

Ian: I don't think that's probably going to happen for if the only reason that the Venezuelan regime is incredibly hostile to the US for and has been for decades now, but also China is increasing its presence there. And if you're looking at Chinese allies for the lack of a better term, Venezuela is one of China's strongest supporters in Latin America. And I don't see a massive opening taking place in Venezuela. Cuba, however, which is not obviously connected to the energy industry has a better chance, and there political reasons for that largely due to the fact that uh Raul Castro had to come out of retirement and basically to prop up the Cuban regime. And I think he's in his like mid-90s. If you're relying on that for legitimacy of the existing regime, it doesn't have anything to really replace itself. So, there's a greater likelihood if you're looking at Latin American openings of a potential opening in Cuba as opposed to Venezuela. Cuba has more things going forward in terms of just opening as opposed to Venezuela, partly because of energy because there's greater interest in controlling a resource that allows for rentier policies as opposed to Cuba, which doesn't really have that. There's greater chances of liberalization in Cuba than there is in Venezuela for those political reasons. 

Tom: When President Obama made his historic visit to Cuba, the thing that intrigued me the most about the visit was there were 2,000 plus American business executives who went. You see a huge business opportunity in Cuba shortly thereafter. I traveled to Cuba as a tourist and much to my show grin when I looked at a map, I realized Cuba is the gateway to sort of northeast Latin America. I don't know why I didn't appreciate it that before, but in terms of shipping in terms of trans shipping both ways, it struck me that Cuba is well suited to play a role if it is open going forward. Would you find those to be fair assessments? 

Ian: Absolutely! Actually prior to probably the 19th century, if you look at the 16th, 17th centuries, Cuba was for lack of better term, arguably the financial center of the Americas under the Spanish. And while it doesn't have the natural resources that other countries do in Latin America, it's positioning if they liberalize tomorrow 50 years from now, it could play the same role in Latin America as Lewe does in Africa. You know you could have a source of investments. It could become a financial center if it wanted to. It's got great weather. It has the potential to sort of be the financial center, an epicenter of Latin America if it wanted to do that. It would require a lot of reforms to make that happen and to attract investment. It would need also its own ties regionally with other countries in Latin America as well as US investment, but it has that potential of course. 

Tom: Let me turn to Chile and Ecuador. Two countries that have increased corruption risks, I would say, over the past three to five years. How do you assess those two countries for US companies who want to do business there? 

Ian: Chile is safer obviously for a number of reasons. One, it has a more pro-business body of law behind it. Chile is however very divided recently. There was a push to change Chile's constitution, which would have made it basically totalitarian overnight. And Chilean voters rejected that. And as far as I know, there's no immediate plan to try to do that again, but from sort of a rule of law standpoint, Chile is safer though there are pushes to increase authoritarianism there just how the countries bifurcated politically. But that doesn't necessarily mean that that's going to happen. And from a corruption standpoint, even though that risk is increasing, it's still I would say a better risk than Ecuador. And these national screenings are something any company would have to do. So, if you're looking at investing in a specific region and you're contemplating country A versus country B, you have to look at body of law, how does the constitution actually mean anything? Do contracts actually mean anything? How likely are they to be actually enforced or is corruption too prevalent in order to safeguard that decision? You have to look at labor relations and how corruption plays out there, criminal risks, etc. And those are all factors that go into play. And that requires good screening. It's not just what's written down on paper. That requires going above and beyond just whatever constitution or legal agreement is there. It requires actually looking at precedent, how they play out with other competitors, etc. in that specific country. Chile has its risks. Ecuador looks more unstable for a number of reasons. Partly they had recent violence there, electorally. If I had personally had to pick, I would pick Chile. 

Tom: Well Ian, unfortunately, we are near the end of our time for this episode. But I hope our listeners are joining us in part three where we take a look at the Russia Ukraine. Before we leave Ian, if I could ask if our listeners wanted any more information on the topics, you've touched on, what would be the best place for them to go?

Ian: Our website Infortal Worldwide. 

Tom: Ian, I look forward to continuing this conversation.


Infortal Worldwide | Email | Tel: 1.800.736.4999


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Infortal’s Continuing Legal Education (CLE) courses are designed to equip executives, attorneys and risk managers with strategic insights to navigate the complex landscape of geopolitical risk. We cover topics such as international sanctions, regulatory risks, corporate espionage, AML, global warfare, anti-terrorist financing and corruption.

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