Multiple jurisdictions
Depending on which jurisdiction a firm is active in it may be required to comply with the requirements of multiple sanctions regimes.
Some jurisdictions’ requirements may also apply without a firm having an actual presence in that jurisdiction.
The UK’S Joint Money Laundering Steering Group, suggests in its guidance that
“firms should take an approach which is appropriate for their business model, when assessing where and how their business is most likely to encounter sanctioned parties, and to focus resources and tailor systems and controls accordingly.”
It would seem to be a sensible approach to take by any organization, not only ones in the UK.
A firm should develop its approach in the context of how it might most likely be involved in breaching economic and country-related sanctions.
A firm may take into account a range of factors when conducting its assessment, including:
- Its customer, product and activity profiles
- Its distribution channels
- The complexity and volume of its transactions
- Its processes and systems
- Its operating environment
- The screening processes of other parties
- The geographic risk of where it does business
- The sanctions regulations of relevant countries
Russian Federation & Ukraine
One of the hottest topics in 2014/15, has been the uptick of conflict along the Russian Federation’s eastern border with Ukraine, which followed hot on the heels of the annexing of Crimea.
The result was and still is the imposition of sanctions by the US and the EU along with several other countries, honing in on those they perceive to be responsible for the unrest. Sanctions have primarily targeted individuals close to the President, those politically exposed persons (PEPs), and state controlled entities (SOEs), and those in which the PEPs have a significant holding. In turn the Putin lead government has reciprocated with their own sanctions against certain Western Europe and US individuals and entities, and imposed an import ban on products from within the EU.
Middle East
The crisis in Syria and Iraq has escalated with the Islamic State (IS) insurgent group committing atrocities across the region and sanctions being imposed on the group’s key personnel.
The situation with sanctions against Iran is even more complex due to the Joint Plan of Action or Interim Agreement that has been extended beyond its initial 6 month period until November 23, 2014. Nevertheless firms still need to be alert to the risks involved and ensure that any business conducted with Iran is complaint with current sanction rulings.
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