Financial Crime World

Compliance Risk Management in UKRAINE: A Logical Sequence of Challenges

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As Russia’s invasion of Ukraine continues to pose a significant threat to global stability and security, compliance officers are facing a complex web of challenges that require immediate attention. In this article, we will outline the key compliance risks emerging from this crisis and provide guidance on how to address them.

Health and Safety Issues

The first challenge is to ensure the physical safety of employees in Ukraine. Companies must take steps to:

  • Provide assistance to affected employees
  • Evacuate personnel if necessary
  • Offer financial support

Cybersecurity Concerns

Cybersecurity is a major concern, with potential Russian cyberattacks posing a significant threat. To mitigate this risk, companies should:

  • Separate industrial controls from the internet
  • Implement two-factor authentication for remote access and privileged user access
  • Follow recommendations from CISA (United States Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency)

Sanctions Compliance

Sanctions compliance is an urgent priority. The US Office of Foreign Assets Control has rolled out full blocking sanctions against numerous Russian banks, while the US Bureau of Industry & Security has introduced export control sanctions to prevent a wide range of tech products and other goods reaching Russian shores. Companies should:

  • Ensure their sanctions compliance programs can adapt quickly to changing circumstances
  • Review their programs for effectiveness

Disclosure Risks

Public companies must consider how to report their exposure to Russia in their next quarterly filing, with the deadline looming on March 14 for retailers and others with a quarter ending on January 31.

Policies for Cooperation with Law Enforcement

Companies must have clear policies on:

  • Voluntary self-disclosure of corruption or sanctions issues
  • Internal investigation capabilities in case of concerns about customers or business partners
  • Cooperation with law enforcement agencies, such as the Justice Department

New Due Diligence Risks

The Ukraine crisis presents new due diligence risks. Companies must ensure their procedures and internal controls can accommodate new ventures and business partners.

Supply Chain Risks

While supply chain risks may be more operational in nature rather than compliance-related, companies should still consider the potential impact of the crisis on their global operations.

Conclusion

The Ukraine crisis presents a complex set of compliance challenges for companies operating globally. By prioritizing these key areas and adapting to the rapidly changing landscape, compliance officers can mitigate potential risks and ensure their organizations’ success in this new era.