International firms face increasing sanctions pressure as regulations expand, with compliance teams struggling to adapt and enforce new measures.
International firms are facing increasing pressure from regulators as sanctions regimes expand and enforcement intensifies, according to Dow Jones.
New measures include the EU widening restrictions on Russian assets, the US designating cartels as terrorist organizations, and Washington implementing its Outbound Investment Security Programme against China. Additionally, sanctions shifts in the Middle East and the global adoption of the Office of Foreign Assets Control's 50% Rule are adding to the complexity. Firms breaching these rules have already faced fines exceeding US$10 million this year.
Risk managers report a lack of resources and infrastructure necessary to run effective compliance programs. They cite shortages in research-based judgment skills and difficulties in accessing reliable data from multiple sources. Ensuring accuracy and consistency remains a persistent challenge.
Compliance teams often find themselves shorthanded and uncertain when screening transactions. Ambiguous and sometimes conflicting sanctions, coupled with unclear regulatory guidance, heighten the risk. Questions linger over whether the US will diverge from allies such as Canada, the UK, and the EU regarding sanctions on Russia and Syria. Within the US Treasury, inconsistent use of FinCEN and OFAC enforcement tools is also creating confusion.
Despite these hurdles, firms are adopting best practices to stay ahead. Leaders told Dow Jones that they are deploying due diligence as a first defense against money laundering, harnessing AI and data for greater efficiency, and embedding sanctioned securities screening across trade execution workflows rather than limiting it to onboarding.
