7th June 2017

Prevention is better than cure: meeting regulatory expectations on sanctions compliance

Written by Holly Whitehead, Research and Development Manager, International Compliance Training

Recent international political developments have pushed the use of financial sanctions to the top of the political agenda. It is critical that firms and their compliance functions understand and fulfil their legal and regulatory sanctions obligations.

Often, businesses are effectively asked to act as a front line against financial crime, money laundering, and terrorist financing — with serious regulatory and reputational consequences if things go wrong.

All firms are expected to act diligently to ensure that they are not doing business with individuals, entities, countries, regions or activities that are subject to sanctions.

While it is not possible to prevent every instance of sanctions-related activity, firms must establish controls through a programme of detection and appropriate action to avoid risks, or at least mitigate the effects of those that materialise, in line with international and domestic regulatory obligations and industry best practice.

However, sanctions are continuously evolving in response to demands from the international community they are designed to protect. Keeping up with these and the constantly changing mix of law, policy, economics and international relations from multiple sanctions regimes can be challenging.

When assessing on-going compliance, regulators look for evidence that firms:

  • ensure that controls are in place to identify changes to sanctions regimes as soon as possible;
  • have trained staff in place who understand the implications of sanctions and new developments, and to communicate these implications to staff and senior management;
  • design relevant tools within a robust sanctions governance framework for effective implementation;
  • institute strong screening systems, with regular updates to watch lists; and
  • ensure that appropriate staff are able to review, discount or escalate potential sanctions breaches.

Meeting these expectations in practice often comes down to ensuring professionals have the technical and practical skills that they need as well as knowledge of law and regulation case studies to provide best practice in managing the complex nature of sanctions.

This should be an on-going effort — it is counterproductive to invest in a sanctions programme and training pending a sanctions-related investigation.

To find out more about ICA’s Advanced Certificate in Managing Sanctions Risk, designed for anyone involved in identifying, understanding and managing sanctions risk exposure, contact International Compliance Training directly on +44(0)121 362 7534 or email ict@int-comp.com.

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