In the first part of this blog, published last month, I covered the first two sanctions lessons learned from observing the financial industry and why it’s dangerous to assume:
- Sanctions aren’t relevant to you
- Your freight forwarder and broker will keep you compliant
In today’s blog, I will talk about two further observations made that can have costly consequences for businesses.
- Not keeping on top of the changing sanctions landscape
- Not defining your company's risk appetite to sanctions
Not keeping on top of the changing sanctions landscape
The only constant in the sanctions landscape is that it doesn’t stand still.
There are many bodies that impose sanctions, and each issues their own lists. For UK businesses, the most relevant sanctioning bodies include the European Union, HM Treasury, US Office of Foreign Assets Control (OFAC) and the UN Security Council.
It would be wise to look beyond these for other sanctioning bodies depending where you trade, the currencies you trade in and who your partners are.
Putting a process in place to monitor these lists on a regular basis – whether that is daily or weekly, is the only way to keep on top of changes.
Not defining your company’s risk appetite to sanctions
Let’s be clear, if your risk appetite is not clearly defined and communicated, it is very likely there will be operational inconsistencies.
It is imperative that you and your relevant colleagues understand and know what the company’s risk appetite is, how that determines with whom the company is willing to enter into business, and what the associated risks are.
For example, is the business happy to work with individuals in a potentially sanctioned country?
What is the risk of doing so? Which flags in your screening process does the business want to act on to ensure sanctions risk is minimised in the organisation?
Understanding the answers to questions such as these, and defining policies and procedures to support them, is a crucial step in defining and maintain compliance.
It is also important to provide staff with regular sanctions and risk compliance training.
Ensuring you stay on the right side of bodies that lay down sanctions regulations, will be dependent on several factors.
The starting point is knowing that you have to comply. Thereafter, ensure you take responsibility by keeping up to date with changing lists and ensuring that the business has a clearly defined risk appetite with policies and procedures to support it.
You can find out more and learn how to improve your sanctions compliance programme by downloading our new trade compliance white paper: The role of screening in reducing the risk of sanctions breaches in the corporate environment.