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In today’s constantly changing regulatory landscape, businesses face numerous challenges when it comes to compliance. One key challenge is remaining compliant with financial sanctions. Staying up to date with sanctions can be difficult, time-consuming, and hard to manage—especially with rapid changes to sanctions regulations and with geopolitical conflicts, incidents, and tensions from around the world seeing new sanctions imposed almost every couple of weeks.
For example, in October 2024, the Office of Trade Sanctions Implementation (OTSI) was established in the UK to strengthen the UK’s implementation and enforcement of trade sanctions. Importantly, OTSI operates under a strict liability framework, meaning entities can be penalised for breaches regardless of intent or knowledge. This is a significant shift from Anti-Money Laundering (AML) regulations, which typically require evidence of intent or negligence. On top of that, breaches can attract significant financial penalties which can be far more damaging to companies’ reputation.
So, how can companies keep up to date with sanctions in this constantly evolving regulatory landscape?
To grasp the importance of compliance, and the consequences of non-compliance, let’s take a look at a few recent examples where firms were fined by regulators for breaching financial sanctions regulations.
In one case, a financial institution was fined more than £100m in the UK for violating sanctions regulations. This included anti-money laundering (AML) breaches and inadequate systems and controls to prevent sanctions breaches. The failure to monitor, detect, and prevent these breaches not only resulted in a significant financial loss for the institution but also damaged its reputation as a trusted financial entity.
In another case, the Financial Conduct Authority also found that a well-known mid-size bank continued using inadequate AML systems, allowing money to pass through without proper checks on the source of wealth and funds. They were later fined close to £8 million.
Finally, one multinational bank was fined $186m by the US Federal Reserve for ongoing issues in sanctions compliance and transaction monitoring, despite a previous fine of $99m for the same issues.
Companies can stay up to date with sanctions regulations by implementing a combination of proactive monitoring, compliance programs, and leveraging external expertise. Here is what you can do:
1. Monitor Government and Regulatory Sources
2. Train Employees Regularly
3. Use Automated Screening Tools
4. Engage Compliance Experts & Legal Counsel
5. Develop an Internal Compliance Program
6. Monitor News & Third-Party Risk
Have you thought about how you are staying compliant with sanctions on your electronic communications channels? Better yet, have you thought about how you can better support your staff with real-time insights delivered in the moment, when needed most?
To mitigate the risks associated with sanctions breaches, organisations normally resort to traditional compliance measures, such as those detailed above. This educates employees about the risks associated with non-compliance and the specific requirements associated with sanctions. By regularly updating employees on new regulations and reinforcing the importance of compliance, organisations can foster a culture of awareness and responsibility.
However, advances in technology have made it possible to proactively prevent potential breaches in real time, before they become an issue and cause regulatory investigations, financial penalties, and reputational damage. This is now possible with the help of advanced solutions that use artificial intelligence (AI) to proactively prevent breaches by providing continuous training to employees, in real time, via the channels they use on a daily basis.
Whether on Outlook, Teams, or Slack, nowadays we are in constant dialogue with colleagues, customers, and vendors. Be it email or instant messaging, these platforms have become indispensable to our daily business interactions. So why not leverage them to provide real-time assistance and continuous training to staff to proactively foster compliance with sanctions?
Lexverify’s AI-powered assistant helps prevent sanctions breaches on electronic communications in real time, providing continuous development support to employees and delivering just-in-time compliance training to support learning & development. It helps ensure all your electronic communications are compliant; every email, every message, every time. For Risk & Compliance and Legal teams, Lexverify’s admin dashboard provides real-time visibility of sanctions breaches, enabling them to proactively manage risk, better allocate training budgets, and improve their organisation’s compliance posture.
Complying with financial sanctions is of paramount importance for organisations operating in today’s global business environment. The legal and regulatory risks associated with non-compliance can be devastating, leading to severe financial penalties and irreparable reputational damage. Implementing robust systems, providing ongoing compliance training, and utilising innovative solutions like Lexverify are crucial steps toward fostering a culture of compliance and providing the right assistance to your staff.
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