Financial Sanctions: Sanctions compliance in the financial sector

The dynamic development of sanctions law as a result of Russia's ongoing war against Ukraine continues to pose major challenges for the departments responsible for compliance with sanctions in companies.

At the same time, the key role played by financial institutions in sanctions compliance is increasingly attracting the attention of legislators and regulators.

In view of the unprecedented nature and scope of the EU sanctions packages against Russia, banks, insurance companies and other financial service providers had to adapt their sanctions compliance programs (SCP) to the new embargo and sanctions regulations under enormous time pressure. Due to time and personnel constraints, interim solutions had to be applied in many cases.

More than two years after the beginning of the war and the 14th sanctions package, companies are faced with the question of whether the ad-hoc adjustments to their SCP will also meet regulatory requirements in the long term and how new sanctions regulations can be integrated into the SCP with legal certainty. Moreover, it is increasingly important to ensure that attempts at circumvention are effectively identified and prevented. After all, regardless of the complexity and speed with which new sanctions regulations are issued and must be implemented, violations can result in severe fines, criminal sanctions, and reputational damage.

We provide an overview of the current challenges of sanctions compliance in the financial sector.

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