Institute for Financial Integrity’s Post

The Russia-Ukraine conflict prompted the UK and the US to impose sanctions on Russia. The UK, under the Sanctions and Anti-Money Laundering Act 2018, imposed sanctions covering various sectors. The US, through FinCEN and BIS, intensified export controls, issuing an alert in 2022 to address evasion attempts amid Russia's aggression in Ukraine. Enforcement of sanctions and export controls significantly hampered Russia's military industrial complex, leading to challenges in equipment replenishment. This resulted in increased attempts to bypass export controls, requiring heightened vigilance from financial institutions. A case study involving KanRus Trading Company revealed two individuals from Kansas arrested for illicitly exporting aviation technology to Russia, violating US export controls. They concealed end users and destinations, frequently using transshipment tactics. Recent export control measures aim to impede Russia's access to critical components, emphasizing the widespread use of third-party intermediaries and transshipment points to evade controls and acquire restricted items. What could be done better in this scenario? Third party due diligence. Third-party due diligence is a critical process that involves investigating and understanding one's business partners. It entails making suitable inquiries to verify the honesty and integrity of existing or prospective third parties. For a robust third-party due diligence process, organizations should implement key supporting measures at an operational level. The question arises, however, Why third-party due diligence is crucial for sanctions compliance? What could happen otherwise? Find the answer in AML Watcher's whitepaper: https://lnkd.in/dTVrYbqi #Sanctions #AML #Compliance #MoneyLaundering #AMLWatcher

Some first impressions from today's "Quint-Seal" advisory from the DOJ and OFAC on maritime sanctions evasion. - First, I'm just now learning that "quint" is a word. That's cool. - This is an unsubtle reminder that the DOJ is deeply involved in prosecuting cases relating to sanctions violations, and intends to focus on the maritime industry. - The USG continues to raise the bar of their compliance expectations by directing persons to look for manipulation of AIS signals, including both dark activity and spoofing (they describe the latter), and to also now use commercial satellite imagery when necessary to verify a vessel's location. - The advisory highlights the importance of all maritime parties in conducting KYC on a vessel's ownership to determine its ultimate beneficial owner, and to screen a vessel and its related parties against sanctions lists. https://lnkd.in/eqXDC8E6

Quint-Seal Compliance note urging any stakeholders involved in the cross-border transportation of goods - including financial institutions - to 'know their cargo': "Non-U.S. persons are also subject to certain OFAC prohibitions. For example, non-U.S. persons are prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. OFAC uses its enforcement discretion robustly to identify and address U.S. sanctions violations by non-U.S. persons ." https://lnkd.in/dxGzeURy #globaltradecompliance #exportcontrol #sanctionscompliance

U.S. Sanctions Apply Beyond Borders 💼 The reach of U.S. sanctions may be much greater than many companies around the globe realize - as EFG International AG, a Swiss banking giant, has recently discovered. Despite being a non-US national company, EFG found itself facing allegations of contravening U.S. sanctions that resulted in a $3.7 million settlement. It is crucial to note that U.S. sanctions apply not just to U.S. nationals but also to transactions processed through the United States or involving U.S. goods. EFG, with about 40 subsidiaries worldwide, was accused of trading securities for clients listed in the OFAC (Office of Foreign Assets Control) sanctions. What's more, they were conducting these trades under their own name, protecting the identities of these sanctioned clients from their American market counterparts. The alleged violations included breaches of the Cuban Assets Control Regulations from 2014 to 2018, with EFG handling over 700 transactions for clients either in Cuba or linked to Cuba. We're talking about a cool $30 million. There was also an instance involving a sanctioned Chinese individual and another case related to Russian sanctions. Interestingly, EFG might have escaped more dire consequences. Had OFAC chosen to impose the maximum civil penalty, EFG could have been facing a fine of up to $276 million. However, due to EFG's voluntary disclosure, OFAC chose a significantly smaller penalty. The takeaway for international trading firms and financial institutions? U.S. Sanctions have a long reach and due diligence is not optional, but required. This case is a stark reminder that no company, regardless of where it's headquartered or the nationality of its clients, is beyond the scope of U.S. laws when its activities touch on U.S. jurisdictions. #compliance #sanctions #OFAC

Some helpful thoughts on the latest U.S. government advisory, titled "Know Your Cargo: Reinforcing Best Practices to Ensure the Safe and Compliant Transport of Goods in Maritime and Other Forms of Transportation." It's another clear sign of how much the maritime shipping industry is becoming a focal point for agencies involved in sanctions and export controls enforcement. #OFAC #BIS #DOJ #sanctionscompliance #maritimeindustry #exportcontrols #tradecompliance

🚨 URGENT ALERT: NCA Issues Red Alert on Russia's Sanctions Circumvention Attempt 🚨 The National Crime Agency (NCA) has issued a RED ALERT, revealing attempts by Russia to circumvent sanctions and procure restricted goods and services. 🌐🔍 Key Points: 🔴 Red Alert Issued: The NCA has raised the alarm about Russia's efforts to sidestep sanctions, posing a significant threat. 🌐 International Implications: This news underscores the importance of vigilant cooperation among nations to curb illicit activities and uphold international sanctions. 🔗 Read the NCA Alert Here: https://lnkd.in/e9i-ntK7 🚨 NCA Red Flags: 3 Key Indicators of Sanctions Evasion 🚨 1.     Newly Incorporated Companies in Diversionary Destinations: Transactions involving companies incorporated after 24th February 2022 based in known diversionary destinations raise significant concerns. 2.     Customer Information Evasion: Red flags emerge when customers lack or refuse to provide essential details on banks, shippers, end users, and company ownership, hindering transparency. 3.     Significant Overpayment for Restricted Items: A customer significantly overpaying for a Common High Priority list item compared to known market prices is a clear indicator of potential sanctions evasion. #NCA #RedAlert #Sanctions #InternationalTrade #StayInformed #SecurityMatters

In today's global marketplace, sanctions compliance is not just a legal requirement, it's a strategic imperative. I'm glad to have attended this insightful conference on "Forging Regulatory Resilience on Sanctions", organised by the The Sanctions Monitoring Board - Malta, delving into various relevant themes namely: ⚖️ The Maltese Sanctions Compliance framework; 🤝 Ways of enhancing sanctions implementation through continuous international collaboration; 📄 Case Studies and Typologies of sanctions compliance in Financial Services, Trade and Maritime; 🌍 Legislative Developments on Sanctions within the National and International scene; Some key takeaways I found noteworthy include: ▶️ The highly complex, cross-border nature of sanctions evasion, underscoring the need for further international collaboration and partnerships; ▶️ The importance of a clear and well-understood legal framework, equally tackling the varying challenges faced by both subject and non-subject persons; ▶️ The need to go beyond merely screening your customer base and understand it more intricately, to effectively assess your sanctions risk exposure; ▶️ The increased complexity makes it vital for operators to invest in specific sanctions training for their employees; ▶️ Investment in Sanctions Compliance is not just about avoiding penalties but paramount to safeguard against reputational risk, enhancing business integrity, and increasing resilience; Thanks goes to all the speakers at the event for their input and the Financial Intelligence Analysis Unit (FIAU) Malta for giving me this opportunity. #SanctionsCompliance #InternationalCollaboration #BusinessIntegrity

Recently the U.S. Departments of Commerce, Treasury, and Justice issued a Tri-Seal Compliance Note warning non-U.S. persons of the risks of violating U.S. sanctions and export control laws. Read the latest alert on this topic from our #economicsanctions team Jason Wright, Ana Amador,Marwa F., Ziad El Oud and Waka Taniguchi. Click on the image below to read the expanded alert. U.S. Agencies highlight that sanctions and export controls apply to non-U.S. companies and individuals in latest Tri-Seal Compliance Note that follows previous tri-seal compliance notes focused on voluntary self-disclosure policy and the use of third-party intermediaries for sanctions evasion and reflects enhanced interagency cooperation on enforcement of #sanctions and #export controls.

🌐 Sanctions Compliance Update for Turkish Businesses: As we observe the anniversary of the sanctions against Russia, it's crucial to highlight recent developments in the international sanctions landscape that have significant implications for Turkish businesses: 🇺🇲 A notable update is the anticipated addition of approximately 500 new individuals or entities to the OFAC's SDN list around February 24. 🇬🇧 Simultaneously, in the EU, the Council adopted today a thirteenth package of restrictive measures against Russia. The list also includes firms in Turkey, some of which are also being targeted for the first time, according to a report.                                          🇪🇺 Adding to this, the UK's Office of Financial Sanctions Implementation (OFSI) has recently announced new sanctions lists, which include Turkish entities. 🔍 Why Turkish Businesses Should Pay Attention: Given the increasing inclusion of Turkish entities in these sanctions lists, Turkish businesses are at a heightened risk, especially those potentially engaged in activities that might be seen as circumventing these sanctions and those continuing dealings with those sanctions Turkish parties. It's critical for these businesses to immediately review and update their compliance programs to avoid potential legal and financial penalties. 🛡️ Urgent Actions Needed: To safeguard against these risks, we strongly recommend the following steps: * Review the Latest Sanctions Lists: Keep abreast of the most recent additions, particularly those that affect Turkish entities. * Assess Your Business Exposure: If your business has any connections or dealings with the newly sanctioned entities or individuals, it's crucial to evaluate these relationships immediately. * Strengthen Compliance Measures: Update your compliance program to ensure they are robust and responsive to these new developments. 📈 Mitigating Risks for Your Business: The companies active in international trade are considered as sophisticated actors by OFAC. For those companies, compliance with international sanctions is not just a legal mandate but a strategic necessity. For Turkish businesses, adapting to these changes is vital to mitigate legal risks and maintain a strong reputation in the international arena. 📍 Be proactive in staying informed and compliant. By remaining vigilant and taking timely measures, Turkish businesses can effectively navigate these challenges and continue to thrive in a complex global market. Remember, proactive compliance is key; once financial assets are frozen or your entity is listed in sanctions, the options for remediation become significantly limited. We recommend acting now to safeguard your business interests and maintain uninterrupted operations. #SanctionsCompliance #exportcontrols #OFAC #OFSI #EUSanctions #LegalUpdate #RiskManagement

The UK Government has announced the creation of the Office of Trade Sanctions Implementation (OTSI) in an effort to clamp down on trade sanctions evasion and strengthen enforcement.   As the UK, alongside its international partners, continues to implement strict sanctions measures on Russia, the commitment of resources to a department focusing specifically on enforcement across all UK trade sanctions regimes signals an appetite for an increase in UK enforcement action.   In our latest briefing, HFW's Daniel Martin, David Savage, James Neale, Richard Ayo Soyoye and Stephen Green explore whether the creation of OTSI will usher in a new era of UK sanctions enforcement.   To read the full briefing, visit: https://lnkd.in/e2uM8H7R   For more information on our sanctions offering, speak to the authors, or visit: https://lnkd.in/dur2Gw3   #OTSI #SanctionsEnforcement #TradeSanctions #UKSanctions #OFSI #SanctionsRisks