The sixth of the AML/CFT Webinar Series jointly organized by ABA and Fintelekt Advisory Services was successfully held on May 6, 2020. Focusing on ““Sanctions“, the webinar drew a record-breaking participation of over 800 bankers and lawyers from 40 countries and territories from all over the world.

Moderated by Shirish Pathak, Managing Director, Fintelekt Advisory Services, the webinar featured four expert speakers who shared their views on recent sanctions enforcement trends and implications on banks’ businesses, keeping track of frequent changes on global sanctions lists and key considerations for banks’ sanctions compliance programmes.

(1) Nicholas Turner, Of Counsel, Steptoe & Johnson joined from Hong Kong; (2) Surendra Thapa, President & Founder, Global Intelligence Analysis Corporation joined from the US; (3) Vincent Gaudel, Compliance Expert, Accuity joined from France; and (4) Hala Bou Alwan, Founder & CEO, Hala Bou Alwan Consultancy joined the webinar from the UAE.

The webinar highlighted the growing importance of the subject of sanctions compliance and the increasing complexity associated with it. Key points discussed during the webinar are presented as follows:

SUMMARY

• The speakers dispelled the illusion that is often held by smaller banks that the impact of sanctions, especially the Office of Foreign Assets Control (OFAC) sanctions, is restricted only to large banks. Larger banks may have elevated risks, but smaller banks are equally vulnerable to sanctions actions and may need to comply with sanctions despite the lack of jurisdiction.
• Often correspondent banks or counterparties demand compliance. Banks may also wish to avoid the reputational, commercial and legal impact owing to non-compliance, including from potential secondary sanctions.
• The complexity in sanctions was well brought out by statistics depicting the significant increase in the number of sanctions programmes as well as countries enforcing sanctions in the last few years.
• Sanctions differ by sector and type of activity. Exceptions, authorisations and licenses may apply. Secondary sanctions also subject non-US persons to US sanctions law. OFAC claims jurisdiction on activities involving USD, US-origin goods and technology.
• Further, sanctions also apply to entities not captured in the official list. Especially in the case of OFAC, entities owned 50% or more, directly or indirectly by sanctioned entities or individuals, are also automatically sanctioned.
• In recent years, other sanctions authorities such as the UK, European Union, Australia and others have evolved as strong sanctions enforcing bodies.
• All of these factors add to the complexity, inconsistency and challenging environment surrounding sanctions, even as regulatory scrutiny continues to rise.
• Timely sanctions implementation is critical and calls for robust processes and technology. List management processes and sound regulatory watch are key for ongoing compliance.
• Quality data, up-to-date screening technology and the right expertise are key components for productive sanctions screening
• The OFAC recommends that all banks should have an agile and responsive sanctions compliance programme in place, which is updated and applied throughout the enterprise.
• It is important to understand how sanctions violations occur, and how regulators interpret the banks’ processes if a breach were to occur.
• In response to the Covid-19 situation and demands for relaxations on humanitarian ground, the OFAC is encouraging companies to take advantage of relief exceptions and provisions already built into sanctions orders through general and specific licenses.
• Recently OFAC publicized Covid-19 related guidance which was followed by FAQs on relief activities that can be conducted for sanctions programmes like Iran, Venezuela and Syria.
• Arrangements such as the Swiss Humanitarian Trade Arrangement (joint effort with Swiss government for humanitarian trade with Iran) are likely to continue for humanitarian and relief activities

RELATED MATERIALS

ABA would like to remind participants and interested persons of the following materials available for reference:

(1) The webinar’s presentation in PDF format can be downloaded HERE.

(2) The answers to the 33 questions issued by the participants can be viewed in the ABA Home Page HERE.

(3) The video presentation of the 6th webinar is available in the ABA Youtube channel.