Sanctions Risk – What’s the Problem?
November 27, 2016
In this webinar, we explore the complexities associated with sanctions. It also addresses the ways that a risk-based approach can help you ensure your organization is not in violation of any sanctions. Strategic Forecaster and Risk Expert, Chris Parry, and Andrew Simpson, CaseWare RCM Chief Operating Officer, joined forces to share their thoughts on the matter.
What are the top issues associated with sanctions risk?
Overlapping sanctions regimes associated with different countries and individuals, in combination with direct, indirect and multi-national exposure, makes understanding sanctions risk extremely difficult.
Chris Parry explained that the overlap confuses what should be in place legally. And sanctions, being partial in their application in international markets, create scenarios where some transactions are sanctioned, while others are not.
These scenarios commonly have links to money laundering, terrorism, and trafficking—which can lead to substantial reputational risk for any firm at the center or periphery of an evaded sanctions regime.
How can financial institutions protect themselves against these risks?
A comprehensive sanctions risk approach with continuous monitoring will reduce risk exposure. Given the challenges financial institutions face with sanctions regimes, they have to do more than periodically check to satisfy a regulatory requirement. Firms need to address exposure to risk from every aspect—continuously.
In addition to a continuous monitoring approach, financial institutions should:
- Stay current with intelligence and partner with an agency to interpret the purpose of the sanction.
- Reduce the number of false positives by looking for optimal data points.
- Have data sets for screening risk; examine end-to-end screening of networks and the supply chain to ensure risk is not introduced into a place where you’re not currently looking.
- Share the risk by partnering with other companies that are considering investing in the same countries or institutions as you. Look at how you can cooperate, share intelligence and share the risk rather than take the full brunt of it on your own.
Watch this webinar to learn more about:
- The character and effectiveness of sanctions regimes
- How to understand evasion and loopholes
- How to implement a comprehensive sanctions risk-based approach
- How to identify the culprits
- Third parties and proxies
- Threats to the effectiveness of future regimes