Overview

Today’s sanctions landscape is rapidly changing and has evolved substantially over the past decade. Traditionally, sanctions were largely imposed against entire countries as an entity, which were comparatively straightforward to monitor. Now, however, sanctions are more granularly targeted; focusing on specific individuals, industry sectors and / or organizations. This is a much more complex landscape for firms to navigate. In addition to UN-mandated sanctions focused on weapons proliferation and terrorism, autonomous sanctions of regimes are increasingly being used by jurisdictions such as the US, the UK, the EU, Canada and Australia to fulfil their foreign policy objectives and exercise economic power. Sanctions are increasingly being used as a policy tool in international crises, particularly by the EU. Already, 2022 has seen an unprecedented use of sanctions in response to Russia’s invasion of Ukraine, with new sanctions being announced on a weekly basis. In light of the current geopolitical issues and tensions, the sanctions environment shows little promise of slowing down. Institutions need clarity on their sanctions risk exposure in order to deploy effective mechanisms to manage the associated risk. This is particularly important for respondent banks that are operating in high risk jurisdictions or those which have significant exposure to Eastern Europe, Russia, China and alike. Using more innovative technologies and tools to manage sanctions can derive significant benefits for firms. Historically, risk aversion has been the primary obstacle to employing technologically advanced solutions in the financial industry. Given the constantly evolving landscape, using legacy systems and technology may in fact be responsible for introducing new risk. Advances in technology, data science and machine learning have made it possible to both satisfy Model Risk Management regulatory requirements, as well as provide solutions that reduce risk in today’s volatile sanctions environment. I look forward to sharing them with you.