Aligning securely with international sanctions
Considering the current situation, financial institutions must prioritise international sanctions and corresponding expectations to comply with the intention of these.
Financial institutions need to ensure that they have capabilities and resources for sanctions management. This includes a balanced re-prioritisation in operations and and appropriately functional technical infrastructure.
• The technical infrastructure to track IP-addresses and accessing bank’s web-services must be in place. It can be expected that a widening sanction scope will be followed by the use of features to conceal IP-addresses (through the use of VPN services etc).
• The ability to analyse new risks related to new developments in jurisdictions including local regions, which can mean that the scope of companies and individuals that can be linked to sanctions must be readdressed. In practice, this involves adjusting the range of unique beneficiary owners including companies that fall within the sanctions scope and making sure that the risk assessment properly covers complex ownership structures. OFAC´s sanction lists provide good guidance, and the developments should also suggest a reinforced focus on ‘white-labelling’ through corporate structures.
With international sanctions, it is also realistic to expect new flows to and between financial institutions in low risk markets to prevent the freezing of assets. Such potential movements will require due care and accuracy in terms of real-time supervision and the prioritisation of alarms.