Trade finance banks operating in the US risk higher penalties under a policy issued by Washington aimed at strengthening and enhancing enforcement of the antiboycott rules administered by the US department of commerce. The rules prohibit US support for unsanctioned foreign boycotts against countries friendly to the US, notably – but not exclusively – the Arab League boycott of Israel.

Letters of credit (L/Cs) that breach antiboycott rules are specifically contemplated in the policy which came into effect on 8 October. Trade finance banks are also at risk of breaching the rules by passing on underlying documents such as bills of lading that may provide information on business relationships with boycotted countries or blacklisted persons.

Several banks have entered into relatively moderate settlement agreements and paid a reduced penalty without having admitted to a violation of the rules under the now redundant policy.

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