How to build a robust sanctions compliance program

10 Oct 2019 10:11 am by Mark Dunn

There are many levels of sanctions regimes to navigate, and failing to comply with sanctions laws can inflict significant legal, financial and reputational damage on a company. An eBook from LexisNexis, “Better Safe than Sorry: The Case for Building a Robust Sanctions Compliance Program”, looks at recent changes in sanctions and advises companies on how they can mitigate their risks.

A complex landscape

Companies must ensure they comply with different levels of sanctions regimes. At the highest level are UN sanctions. Since 1966, the UN Security Council has enacted 30 sanctions regimes, 14 of which continue today. These sanctions regimes are explained in a document that is 173 pages long, which reflects the extensive collection of individuals, entities and states subject to sanctions.
Individual countries also maintain their own sanctions lists, and they appear increasingly willing to take enforcement action against sanctions violations. The U.S. Office of Foreign Assets Control (OFAC) significantly increased the volume and size of penalties and settlements for sanctions violations in 2017. It issued 16 penalties totaling nearly $120 million, compared to nine penalties totaling $21 million in 2016.

Geopolitical issues often lead to changes to existing sanctions, which makes compliance particularly challenging for companies. A good example is the recent war of words between U.S. and Iranian leaders. After the agreement of a nuclear deal between Iran and a group of world powers in 2015, the U.S. lifted many of its sanctions against Iran. But the political balance shifted after the November 2016 election, introducing a tougher stance on Iran. In May 2018, the U.S. signaled it would withdraw from the nuclear deal and in August some sanctions against Iran were restored. These sanctions affect the purchase of gold and precious metals as well as the automotive industry. Within hours of the announcement, German carmaker Daimler AG froze a plan to produce Mercedes Benz trucks in Iran. Further sanctions were expected to follow later in 2018.

What should companies do?

With increased compliance focus on companies outside of the banking and financial services industries, it is crucial for companies to implement a robust framework to screen, monitor and protect against costly sanctions violations. Because sanctions laws change frequently, all internal procedures and controls need to be regularly assessed to identify potential gaps. In such a dynamic environment, companies need tools to automate screening processes for in-the moment insights that are unavailable with slower, manual processes.

Download our sanctions eBook, including a risk assessment checklist which companies can use to assess their sanctions compliance programs. It also recommends ten steps companies should take to support sanctions compliance, including a risk-based sanctions screening process and independent auditing.


What next?

- Download our White Paper, “Better Safe than Sorry: The Case for Building a Robust Sanctions Compliance Program”.
- Share this post with your colleagues on LinkedIn.
- Follow our blog for future updates on PEP risks.