Sanctions and AML Insights

Regulatory bodies play a critical role in establishing standards and guidance for Anti-Money Laundering (AML) compliance. These organizations help to protect the financial system from illicit use and promote national security by issuing guidance and best practices, providing tools and resources, and enforcing the law. In this article, we will look at two of the most well-known regulatory bodies in this area: FinCEN (the Financial Crimes Enforcement Network) and the Financial Action Task Force (FATF).

In the financial industry, ensuring the quality and integrity of data is essential for successful AML (anti-money laundering) compliance programs. Effective data quality and governance practices can help financial institutions identify and prevent money laundering, terrorist financing, and other financial crimes. Poor data quality can lead to missed red flags and false positives or negatives, while effective data governance can help financial institutions improve the accuracy and reliability of their AML compliance programs. By investing in data quality and governance, financial institutions can protect themselves and their customers from the risks of money laundering and other financial crimes.

The Russian invasion of Ukraine has led to a spate of sanctions imposed against the country. In August 2022, the Prime Minister of Australia announced that they would prohibit the import of Russian gold in order to reduce Russia’s ability to fund its invasion of Ukraine. This follows an earlier announcement that Australia will provide duty-free access to imports from Ukraine as part of its pledge to introduce enhanced market access to the nation.

The world has become increasingly digitized. As people continue to conduct business, shop, and operate online tools, a need for digital identifiers has emerged - just like identification and insurance numbers become unique identifiers used by virtually all organizations, from banking to healthcare.

The US employs economic sanctions through OFAC. But do these sanctions impact non-US citizens and businesses?

Payment systems are becoming faster, which may bring new compliance risks for financial institutions. OFAC has issued new guidance related to these systems.

Economic sanctions against countries, entities, and individuals are just one of the ways the US punishes violations of international law and human rights, as well as criminal activities. These sanctions are enforced through OFAC, the Office of Foreign Assets Control. ‍OFAC enforces the US sanctions program against targets from around the world. They may enforce fines and penalties to ensure compliance. It’s important for all organizations and international institutions to familiarise themselves with OFAC's sanctions regimes.

On 18 October 2022, Lafarge, the world’s largest cement manufacturer, pleaded guilty to a charge of conspiring to finance terrorist organizations, including the Islamic State (ISI). The company was fined US$778 million as a result. ‍This case is the Justice Department’s first corporate material support for terrorism prosecution and will likely set the tone for future cases of this nature.

Every business must perform rigorous checks against the SDN list during customer onboarding and KYC. Read here what it is and what to look out for. ‍