The global economic recovery in the aftermath of the COVID-19-triggered recession has encountered formidable obstacles due to armed conflicts and sanctions imposed on various nations. The war in Ukraine stands out as a particularly devastating event that has had far-reaching repercussions on the world economy, posing significant regional and international economic risks. Consequently, numerous nations and international bodies have implemented sanctions in response to these challenges.
The ongoing Russia-Ukraine war has led to an unprecedented surge in updates to the sanctions lists. According to the LexisNexis – Sanction Pulse 2022, the number of restricted parties added to the Specially Designated Nationals (SDN) lists has increased over tenfold, with approximately 5,700 designated parties included. Various SDN lists, including those maintained by the Office of Foreign Assets Control (OFAC), the European Union (EU) and the Office of Financial Sanctions Implementation (OFSI), have witnessed a significant rise in updates, accounting for a 56 percent rise compared to the previous year. These updates have exerted a widespread impact on organizations worldwide.
Financial crime professionals and organizations face numerous challenges in ensuring sanctions compliance amid changing regulations and watch lists. Enterprises must remain on the right side of rules and avoid engaging with restricted entities. Non-compliance with sanctions can result in severe penalties, including civil fines, criminal punishments and even imprisonment.
To effectively tackle these challenges, organizations can partner with global service providers specializing in financial crimes and compliance. These providers harness cutting-edge technology to perform effective sanctions screening checks, Politically Exposed Person (PEP) checks and adverse media analysis, ensuring utmost precision in their screening processes.
Sanctions programs form the core of organizations' Customer Due Diligence (CDD) frameworks, enabling the identification and elimination of restricted parties. With increasing designations being added to the SDN lists, organizations must undertake remediation activities to identify any newly added restricted parties within their existing account base.
To enhance sanctions remediation efforts, organizations should ensure that their screening software and filters are robust, continually tested and calibrated to detect sanctions risks effectively. Tailored remediation efforts, such as individual customer-level analysis, collaboration with third-party data aggregators and external service providers, and the use of Artificial Intelligence (AI) accelerators, are essential to achieve optimal results.
Accomplished service providers have been actively supporting top banks and financial institutions, and FinTechs in meeting their daily sanctions compliance obligations. These providers employ a partnership-oriented approach, leveraging industry best practices and capabilities. Their services include:
Navigating the profound impact of global conflicts and ensuring sanctions compliance stand as critical imperatives for upholding the stability and integrity of the global financial system. The consequences of wars and subsequent sanctions have significant implications for businesses, individuals and the world economy. By partnering with seasoned service providers and harnessing advanced technology, organizations can mitigate risks, adhere to regulations and safeguard their reputation in the face of the ever-evolving sanctions landscape.
To know how WNS is partnering with global banking and financial services organizations to bolster their sanctions compliance policy, contact our experts.
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Banking & Financial Services
16 November 2023
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