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UN Security Council Sanctions Lists Under Scrutiny: Timeliness and Effectiveness of Risk Mitigation Measures
The United Nations Security Council (UNSC) has been reviewing its sanctions lists to ensure that member states comply with prescribed timelines for screening and updating the lists. A recent review revealed that some member states have fallen short in their duties to demonstrate effective risk mitigation measures.
Ineffective Risk Assessments Identified
According to sources familiar with the matter, the UN’s Financial Intelligence Committee (FIC) has identified material exceptions in certain countries’ risk assessments, which may compromise the effectiveness of sanctions. The FIC has called for an exit meeting with management to discuss these exceptions and provide further information.
Assessment Process
The assessment team will present a draft report outlining findings and observations, which will be discussed during the meeting. Management is required to provide inputs within five working days of receiving the draft report. The final report will be presented within 10 working days of receiving management’s input.
Remedial Measures and Progress Tracking
Under the revised methodology, remedial measures and progress tracking have become crucial components in post-assessment monitoring. Assessed entities must avail periodic reports on their progress in implementing remedial measures, which may include quarterly or as-indicated-by-the-FIC submissions.
- Quarterly or as-indicated-by-the-FIC submissions
- Progress tracking to gauge the effectiveness of remedial measures
FIC Review and Enforcement
The FIC reviews these reports, gauging how effectively remedial measures mitigate ML/TF/PF risks. The Committee may seek additional information or conduct further assessments to gain assurance that risk mitigation measures are effective.
- Referral for enforcement considerations in cases where unmitigated or poorly mitigated risks are known
- Supervision team monitors assessed entities’ internal policies and procedures
Compliance Ratings
The revised methodology also introduces compliance ratings assigned to assess the levels of risk mitigation. This development aims to provide a more comprehensive understanding of progress made by assessed entities and demonstrates the impact of the FIC’s supervisory activities.
Ongoing Efforts
As part of ongoing efforts to counter ML, TF, and PF risks within an AML/CFT/CPF framework, the FIC will continue to monitor and supervise member states’ compliance with UNSC sanctions lists.