Sanctions and export control evasion techniques and practical steps to identify, assess and mitigate risk

Abstract

Economic sanctions and trade sanctions have been utilised as diplomatic tools for many years. Since the annexation of Crimea in 2014 and the subsequent illegal invasion of Ukraine by Russia in 2022, the extent and scope of economic and trade sanctions have expanded significantly. Financial institutions (FIs) remain at the forefront of managing the risks associated with these sanctions, both to meet regulatory requirements and expectations and to manage the risks presented by their client portfolio, product and service offering and jurisdictional exposure. This paper outlines the increasing complexity of sanctions and highlights some of the key evasion typologies that exist. This paper also considers how these typologies can be adduced into an FI’s financial crime risk management framework,the external and internal sources available to support that process and the key role that the enterprise-wide risk assessment (EWRA) plays within the financial crime risk management framework. Finally, this paper considers how sanctions risk should not be considered and assessed in isolation, but that like many financial crime risks, a holistic approach should be adopted by FIs to identify, assess and manage these risks. This article is included in The Business and Management Collection (https://hstalks.com/business/).