ACAMS UK Chapter Sanctions Panel: Key Takeaways

The sanctions landscape is ever-changing and fast-paced, making it very difficult to predict, and keep up with. The war in Ukraine has added another layer of challenges for both public and private sectors, creating a “sanctions tsunami”. A recent ACAMS UK Chapter sanctions panel event sponsored by Exiger and Protiviti examined the complexities of the current sanctions landscape including:

• The UK response to the Ukraine crisis and the practitioners’ risks
• The impact of recently issued OFSI enforcement and monetary penalties for breaches of financial sanctions guidance
• The Economic Crime (Transparency and Enforcement) Act 2022
• The use of the technology to uncover hidden sanctions nexus

The panel comprised of industry experts from ACAMS, Exiger, The Dark Money Files and the UK’s competent authority for sanctions, the Office of Sanctions Implementation (OFSI). As sanctions against Russia increase, so do the challenges of keeping track of sanctioned individuals and entities. In late July, the Council of the European Union announced its “maintenance and alignment” package of sanctions. This 7th wave affects Russia’s second most significant export after energy, Russian gold, among other key measures.

Sanctions Panel Key Takeaways

OFSI Sanctions Framework

The Office of Financial Sanctions Implementation’s (OFSI) aim has been to limit Russia’s access to its foreign reserves and military capability. To do so, OFSI updated its Russia sanctions guidance, webinars, red alerts, and other products. OFSI also work with industries, trading bodies and foreign counterparts to ensure sanctions are understood and implemented.

OFSI’s approach to licensing has also dramatically shifted in relation to the Russian crisis. The UK authority has recently issued several OFSI General Licenses. This includes one to further assist the efforts of humanitarian actors so that they do not need to apply for individual licenses from OFSI.

Sanctions Screening Challenges

It was easier to understand exposure to sanctions before the Russian crisis, since we were given names, known associates, addresses, etc. Now, we are only given a name which makes it harder for companies to assess how they can be exposed. Additionally, many Russian oligarchs anticipated that they may be subject to sanctions, therefore they were prepared to evade them. They had time to divest their assets to family members and trusted people whom they are not publicly connected but hold power over. The challenge is – how to follow that? This is where enquiring about the source of wealth becomes paramount to identify hidden assets.

How Technology can Help Mitigating these Challenges

Technology can be a game changer in this context. The use of data aggregators can help tremendously. They usually are updated within 24 hours to reflect additions to sanctions lists. Using multiple sources of information can also prove to be very useful, since databases are not updated at the same time. Sanctions screening software can also help in unwrapping the corporate and ownership structure of an entity to identify a sanctions nexus.

2022 Sanctions Tsunami Key Takeaways

The sanctions panel identified these critical challenges facing the financial crime prevention industry:

• The transition from the sanctions to the AML world: how will companies be able to handle and mitigate the anti-money laundering (AML) risk associated with the avalanche of sanctions taken against Russia-related individuals, entities, and sectors? There is a need to bring AML and sanctions together to work with law enforcement and regulators, to replicate the National Economic Crime Centre’s successful Joint Money Laundering Intelligence Taskforce (JMLIT) initiative in the sanctions space.
• OFSI General Licenses can also represent a risk, as they can be hijacked and cloaked as humanitarian aid. Companies are not best placed to mitigate this risk.
• Secondary Sanctions: from a technology perspective, experts foresee some pain points in implementing extraterritorial, or secondary sanctions. While tools have become more sophisticated than before, relying on machine learning and artificial intelligence in sanction screening will be increasingly important.
• Asset flight is and will continue to be a big issue. There is a need to cooperate at an international level to adopt a common approach to freeze assets. Financial Intelligence Units (FIUs) are already looking into this problem in addition to monitoring for asset flight. Moving forward the question will be how do we manage all the funds being frozen? What will be the legal basis to manage them? Also, how will the funds be seized/confiscated and what will be the legal basis of this?

Panel participants:

• Aamir Hanif, EMEA Financial Crimes / UK MLRO at Stripe and ACAMS UK Chapter Programming Director
• Abs Ghosh, Associate Managing Director at Exiger
• Giles Thomson, Director for Financial Sanctions Implementation at OFSI and Economic Crime HM Treasury
• Justine Walker, Global Head of Sanctions, Compliance and Risk at ACAMS
• Ray Blake, Director at Dark Money Files
• Katarina Cook, Head of Financial Crime & MLRO at Brewin Dolphin and former ACAMS UK Chapter Co-Chair

Financial Crime and Sanctions Risk Management Programs: How Exiger Can Help

Sanctions lists can have a significant impact on business. It is vital to ensure your company has an effective sanctions screening process in place to avoid potential penalties and fines.

Exiger’s team of experts help our clients build sanctions screening capabilities to manage sanctions risk effectively. We offer a range of screening software, managed services and advisory services to help our clients stay ahead of the curve regarding compliance with sanction regulations. 

Exiger has developed purpose-built technology —DDIQ and Insight 3PM— trained and deployed by its subject matter experts to accelerate the auditability, efficiency, quality and cost effectiveness of clients’ sanctions compliance programmes. Our subject matter experts are practitioners that have managed some of the largest and most complex financial crime and sanctions-related programmes in the world. Their extensive industry experience of financial crime and sanctions risk management can help clients:

• Design and implement screening programmes
• Assess sanctions compliance programmes against regulatory standards and industry best practice
• If weaknesses are identified, partner with client teams to enhance sanctins programme controls and develop and deliver sanctions training
• Ensure organisation-wide risk assessments are sufficiently focused on sanctions risk

Contact us today to learn how we can help you protect your business from the risks associated with doing business with sanctioned entities.