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How Compliance With Cyber Sanctions Help Firms Avoid Legal Penalties?Β 

Ever-Evolving Cyber Sanction Regime in Response to Cyber Crime - Is Your Business Ready to Comply?

Cyber Sanctions Insights

Why Cyber Sanctions Became Essential in Cyber Warfare?

With the advent of cyberspace, came a massive shift in the art of war. This shift did not happen overnight. It evolved gradually over the decades. This new military tactic is increasingly being known as 'cyber warfare' where international players, i.e. the states, deliberately attempt to disrupt the cyber activities of rival states by penetrating their electronic devices, cyber networks, and information technology systems, with the intention to cause damage.

In the age of the internet, countries no longer fight conventional wars alone. Now, most conflicts are fought discreetly, with no physical battle or announcement of war.

Governments today employ malicious cyber attacks as national instruments of power by using non-state actors such as hacktivist groups, corporate espionage, organized crime rings, insiders, and mercenary hackers. Cyber attacks are now used as a part of a state’s offensive strategy to achieve its national interests.

In the last few decades, China, North Korea, Russia, and Iran have actively conducted several cyber attacks targeting the financial institutions, government agencies, and business enterprises of Western nations, in particular, the United States, in an attempt to damage their national IT infrastructure.

By 2025, cybercrimes are estimated to cost the global economy an estimated loss of $10.5 trillion annually. The total loss caused by the spillover damage could be much higher.

In 2016, realizing the damaging threat posed by state-sponsored cyber attacks to commerce, financial systems, and national security, the United States was the first to pass legislation against cyber-attacks, followed by the European Union in 2020, United Kingdom (after its EU Exit Regulations) in 2020 and now quite recently, Australia followed the lead and introduced its first cyber sanctions in December 2021.

If evaluated as a state’s economy, cybercrime would have been the third biggest economy totaling USD 6 trillion globally after the U.S.'s $21.44 trillion economy and China’sΒ  $14.14 trillion economy as per the World Economic Forum.

Take for example - ransomware, the most preferred method of attack by cybercriminals. The frequency of ransomware attacks has increased from every 40 seconds back in 2016 to every 11 seconds in 2021, as predicted by Cyber Security Ventures.

To combat these rising cyberattacks, cyber sanctions, a rather recent addition to the regulatory environment, are introduced to obstruct the state-sponsored actors responsible for attacking the rival state’s IT infrastructure in cyberspace, which is widely unregulated under international law.

Cyber sanctions are therefore, put in place to penalize those involved in state-sponsored cyber attacks including theft of intellectual property, ransomware, phishing, spreading false information on cyberspace, and hacking

Cyber Sanctions are now used as a foreign policy toolkit to counter the extraterritorial nature of state-sponsored cyber-attacks. Although primarily imposed unilaterally by the targeted state, it sends a strong message in cyberspace and it's a complementary effort undertaken at the transnational level.