Financial Crime World

Firms Warned of New Tactics in Avoiding Sanctions

Financial institutions and businesses have been alerted to new methods being used by individuals and entities seeking to circumvent economic sanctions. These tactics, which include using unofficial financial networks and government-controlled entities, are designed to hide assets and evade detection.

Staying Vigilant Against Sanctions Evasion

According to a recent guide issued by the International Compliance Professionals Association (ICPAC), firms must remain vigilant in detecting these attempts at sanctions evasion. This can be achieved through:

  • The use of red flags and typologies associated with circumvention
  • Implementation of customer due diligence and enhanced due diligence procedures

Red Flags and Typologies

The guide highlights several key areas where sanctions evasion is commonly attempted, including:

  • Real estate transactions
  • Luxury goods
  • High-value assets
  • Virtual currencies
  • The financial system

Firms are advised to familiarize themselves with red flags and typologies issued by national authorities, such as the Financial Crimes Enforcement Network (FinCEN) and the National Economic Crime Center (NECC). These alerts provide valuable insights into common tactics used by individuals and entities seeking to evade sanctions.

Reporting Channels

The guide emphasizes the importance of reporting suspected sanctions violations. Firms are advised to:

  • Establish robust reporting channels
  • Report suspicious activity to relevant authorities

In addition, the European Union has launched a whistleblower tool that allows individuals to anonymously report possible sanctions violations.

Effective Sanctions Compliance Program

To safeguard against breach of sanctions and sanctions circumvention risks, firms must implement an effective sanctions compliance program. This includes:

  • Adopting a sanctions policy
  • Conducting regular risk assessments
  • Implementing policies, procedures, systems, and controls to identify and prevent sanctions evasion

The guide emphasizes the importance of:

  • Proportionate and adequate measures, tailored to the firm’s specific characteristics and activities
  • Clear reporting procedures
  • Record-keeping requirements

Conclusion

By staying informed about new tactics and techniques used by individuals and entities seeking to evade sanctions, firms can better protect themselves against these risks and ensure compliance with economic sanctions regulations.