This article explores the trends you need to know about, including likely sanctions targets and areas where jurisdictions will work together. It also outlines how to minimize your firm’s sanctions risk exposure in 2025. 

Key sanctions developments in 2025 

1. US to ramp up pressure on China 

2024 was a year of controlled tension between China and the West. The US, and allies like the EU and the UK, issued several sanctions and export controls on China, mostly in response to its development of advanced technology and its support for Russia and Iran. However, these were applied only gradually, and the US chose not to target Chinese banks facilitating Russian sanctions evasion.

In response, China played a “double game” by issuing export controls on dual-use goods with military applications. While these limited the supply of technology to the West, they also restricted exports to Russia, which could be read as a sign that China was willing to assuage US concerns over its relationship with Russia.

All this will likely change as Trump tries to correct what he sees as economic imbalances resulting from China’s trade practices. While he will turn to tariffs initially, precedent suggests a wave of sanctions will follow. The US will also take a harder line on Chinese financial support for Russia’s military efforts in Ukraine – partly to force Russia into an agreement but also to drive a wedge between the two countries. 

Governments across the EU, UK, Canada, and other jurisdictions will follow the US’s lead; expect more designations of Chinese firms and secondary sanctions against smaller Chinese banks. In contrast, anticipated Chinese counter-measures to this firmer position will cause conflicts of interest in firms with both Eastern and Western interests.

2. Russia sanctions continue to create challenges 

With no end to the war in Ukraine in sight, sanctions regimes against Russia will continue. So far, these have aimed to reduce Russian access to the international financial system, limit the supply of goods used in arms production, oil shipping, and logistics, and freeze the assets of Russian individuals.

However, they have encountered problems in their implementation, including loopholes that allowed targets to find workarounds, ineffective enforcement, and “shadow” markets for commodities like Russian oil. In 2025, making sanctions work better will be just as much of a priority as designating new entities. 

Sanctions will continue, with new rounds to come from the EU, UK, and the US: President Trump has already threatened to increase sanctions on Russia if a peace deal is not reached. Having seen their enforcement criticized, governments and regulators will try to change the narrative in 2025. One of their priorities will be to reduce loopholes for evasion, including secondary sanctions on third countries and enforcement actions against individuals facilitating sanctions evasion.

Meanwhile, for as long as the war continues, Russia will continue to seek ways to evade sanctions using third countries and FinTech. If you work in the payment services or crypto-asset service sectors, you should pay special attention to the risks you face.

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3. Middle Eastern sanctions in flux 

A host of US sanctions on Iran target its funding of groups such as Hamas and Hezbollah. Most of these funds derive from Iran’s “shadow” economy, where the profits of illicit oil sales are used to purchase sanctioned goods. 2024 saw Western attempts to tighten sanctions against Iran’s shadow trade and its ongoing efforts to procure commodities like advanced technology on the international market. 

Further US sanctions on Iran and its proxy groups can be expected in 2025l. Whereas the US has also previously taken action against Israeli extremist settler groups, these measures have been rescinded since Trump’s return to office.

As of January 2025, ceasefires have been agreed between Israel and both Hamas and Hezbollah. The prospect of these turning into a more permanent peace, however, seems remote. Further conflict – a likely possibility with the new US administration willing to take a light-touch approach with Israel’s government  – would lead to greater sanctions against Iran and its proxies by the US’s allies, regardless of its origins. 

Since international payments are the lifeblood of the Iranian shadow economy, payment service providers (PSPs) should pay particular attention to sanctions updates. If you work for a PSP (whether fiat- or cryptocurrency-based) with exposure to trading intermediaries, logistics firms, small FIs, or charities in Middle Eastern or East Asian markets, you should review your risks.

4. North Korean loopholes to close

Relations between the West and North Korea remain difficult, thanks to the latter’s military support for Russia. An investigation by The Financial Times and the Royal United Services Institute, for example, suggested Russia was paying for munitions by supplying North Korea with oil over UNSC sanctions limits. 2024 designations responded to North Korea’s weapons proliferation program and illicit funding networks, including cryptocurrency thefts reportedly carried out by hackers working abroad as IT specialists. In 2025, we will likely see more of the same.

However, current sanctions regimes against North Korea are already extensive, and there are few remaining financial levers to pull. Further designations will probably target the Russian end of the arms-for-oil trade and the involvement of third-country entities: the next step for Western countries is to target clandestine North Korean networks in China, dovetailing with the new US administration’s hardline stance towards Beijing. 

While dramatic changes are unlikely, countries with less extensive sanctions regimes will fill the gaps with designations matching longstanding US measures. Any new US designations will focus on firms and intermediaries used for evasion in China, Hong Kong, the UAE, and Southeast Asia.

How to ensure sanctions compliance in 2025 

Faced with multiple developments across a fast-changing global sanctions landscape, advanced, reliable sanctions screening solutions remain paramount for FIs. 

However, in our survey of compliance leaders for The State of Financial Crime 2025, 43 percent cited a limited ability to screen against sanctions lists as their biggest compliance problem.

What are the main limitations to your organization’s current approach to financial crime detection?

Organizations at the forefront of sanctions compliance are prioritizing:

1. Ensuring access to real-time data

Quickly changing designations mean real-time sanctions screening has become more important than ever. Delays in receiving accurate sanctions data mean you risk inadvertently trading with sanctioned entities and incurring regulatory enforcement. A solution that checks customers and supply chain partners against automatically refreshed data is the most efficient way to guard against this risk.

You should also ensure your due diligence processes can draw on other data, such as politically exposed person (PEP) or adverse media information, for the widest possible coverage.

“To insulate your firm from sanctions risks, you must have robust but flexible ongoing customer due diligence, drawing on the best risk information available. This means not only up-to-date sanctions and PEP lists but also adverse media information that can help identify high-risk counterparties not yet designated by governments.”

Andrew Davies, Global Head of Regulatory Affairs, ComplyAdvantage 

2. Identifying third-country risks 

The likelihood of governments and regulators attempting to crack down on Russian and North Korean sanctions evasion via secondary sanctions has put third-country risks into the spotlight. This means FIs need to factor these into their risk assessments and take appropriate steps to mitigate any threats. 

“You should continue existing good practices on name and transaction screening. At the same time, you should pay attention to the risks of sanctions evasion through third countries, taking a proactive approach to identifying risks in your client base through due diligence reviews of high-risk clients.” 

Iain Armstrong, Regulatory Affairs Practice Lead, ComplyAdvantage 

High-risk clients include small or medium-sized import/export firms operating in locations with ties to sanctioned countries. In addition to conducting effective screening, your transaction monitoring should be appropriately calibrated to identify unusual commercial or financial behavior patterns based on evolving crime typologies.

3. Planning ahead for changes

To ensure your organization’s risk management frameworks are fit for purpose, you should be able to implement or adapt new policies as soon as new sanctions are enacted.

This means you should review any risks you might face from direct or correspondent relationships with entities likely to be sanctioned at some point and prepare responses for any future measures against them before they happen. US firms, for example, should have policies for designations of Chinese banks they have relationships with. 

The key here is conducting comprehensive risk assessments and using agile platforms that can react quickly to global developments. When screening or monitoring transactions, use customized rulesets that can be flexibly applied to different customer segments based on your risk appetite and the sanctions challenges you are likely to face.

The post 4 sanctions trends to watch for in 2025 appeared first on ComplyAdvantage.

As part of AML Unplugged, a new and informal networking forum for compliance professionals, ComplyAdvantage hosted a conversation between three industry experts: Iain Armstrong, our Regulatory Affairs Practice Lead, Jessica Cath, Head of Financial Crime at Thistle Initiatives, and Simon McFeely, Managing Director at Finvisor.co.uk. 

In a wide-ranging and informative discussion, Iain, Jessica, and Simon discussed how firms can tackle the issue of APP fraud and get their compliance setup ready for instant payments while continuing to drive innovation. 

This article explores some of the tips and insights from the conversation, guiding firms processing cross-border payments on how to grow their business, not their financial crime risk. 

1. Prepare for changes in consumer expectations

The rise in APP fraud led to £459.7 million in losses in 2023 and has driven major regulatory changes. Firms in the UK now have to reimburse APP fraud victims up to a maximum of £85,000, and expectations are that the EU’s proposed Payment Services Directive 3 (PSD3) will include similar measures. 

Given the dominance of instant transactions, consumers are unlikely to demand a shift in emphasis from speed to security of payments. Our panel agreed that a more likely change will be an expectation for fast reimbursement processes in fraud cases. The regulations specify a maximum of five days, giving firms little time to investigate fraud claims. 

This poses challenges for financial institutions (FIs). In addition to dealing with pressure from customers to reimburse them immediately, they must address the new risk of fraudulent APP fraud reimbursement claims. While the regulatory balance between consumer duty and fraud reductions is difficult to achieve, it is clear that firms’ consumer duty obligations and their need to strengthen anti-fraud controls are, in practice, the same. The cost of fraud is likely to rise for firms as they risk spending more on reimbursement and being targeted by criminals. 

In response, firms should ensure they have robust record-keeping in place, both for their compliance policies and procedures and for individual APP fraud cases and claims. Any decisions made should be backed up with clear documentation to avoid regulatory issues. While firms should draw up their policies based on their expected fraud risks, they should also recognize that exceptions to any rule will always exist and that retaining evidence supporting decisions in these cases is particularly important. 

Given the pressure mandatory reimbursement creates for firms, they may be tempted to implement hard rules, such as stopping all transactions over a certain amount or increasing the frequency of enhanced due diligence (EDD) checks. However, this will only cause customer friction and reduce the efficiency of the compliance process with slower payments and mounting case numbers. Instead, firms should work to understand their customer base to know the specific risks they face and risk-assess their business. 

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2. Calibrate sanctions solutions to customer risk 

Sanctions compliance is top of mind when it comes to challenges for cross-border payments: it ranked alongside APP fraud as one of the top two concerns of firms offering cross-border payments in our survey of AML Unplugged attendees. 

To mitigate concerns in this area, firms must build their solutions around the specific risks they face. While the idea of a risk-based approach is not new to compliance professionals, our panel agreed that weak risk assessments remain an issue for some FIs. In some cases, they resemble box-check exercises or surface-level assessments rather than genuine considerations of risk. 

Simply identifying that a firm may be exposed to sanctions risks is not enough. Instead, firms should look in detail at where their actual sanctions risks lie, taking into account their products, customers, and transaction flows, and outline the steps they will take depending on which risks they are exposed to. Importantly, FIs should update risk assessments regularly rather than continuing to rely on an initial evaluation. 

The sanctions landscape has changed significantly in the last few years, with a huge number of new designations coming into force. One-size-fits-all policies will not fulfill compliance requirements. In practice, sanctions risks will look very different from one jurisdiction to another. The sanctions screening solutions that work are not just plug-and-play but calibrated to an organization’s constantly evolving customer base and risk profile. 

3. Don’t overlook the power of training 

Maintaining the right level of compliance expertise is a related challenge to carrying out fit-for-purpose risk assessments. Smaller and mid-size firms, making the most of limited headcounts and resources, can end up taking a broader approach to anti-money laundering, rather than looking at individual predicate crimes. Specific expertise in sanctions, for example, can be weak until a firm reaches a certain size. 

For these firms, employee training can be an important step in meeting compliance requirements while driving business growth. Employees across the firm should have a strong knowledge of compliance policies, know how to identify risks, and know when to escalate cases to compliance officers or teams. This is especially important for those not in specialist sanctions roles but where mistakes still carry sanctions risks. 

Like risk assessments, employee training can sometimes be overlooked or seen as a formality. Because budgets can be tight, especially at smaller firms, staff only undergo basic training until a problem occurs – at which point any increased training comes too late to solve it. However, this ignores the fact that training can help budgets go further. Firms without the resources to hire large, experienced compliance teams can benefit from embedding effective in-house training early on in their growth, ensuring a strong level of expertise across the organization. 

Just as important, however, is that firms make specialist appointments in important compliance roles. A suitably qualified and experienced officer should always oversee sanctions programs. While specialist sanctions screening tools are essential for firms, firms need to build an effective team to use them. In the increasingly complex world of sanctions compliance, the key to success for firms is to back up detailed risk assessments with the right people, processes, and technology. 

4. Test your screening solutions and data 

New regulations around APP fraud and instant payments only increase the pressure on FIs to optimize their compliance software. Firms should ensure their customer screening and payment screening measures are capable of processing instant payments securely and at scale, with the SEPA ICT regulations specifying a maximum of ten seconds for payment processing. Without proper testing and validation, firms risk not being able to balance their business and compliance objectives in this way. 

Firms should also ensure their screening software is equipped with the correct data – meaning data that is, accurate, complete, relevant, and current. The SEPA ICT regulations direct payment service providers (PSPs) to conduct daily customer screening so that they can process real-time payments more efficiently by avoiding the need to screen each individual payment as it goes through. Meanwhile, major fines for large FIs demonstrate the serious risks of not conducting proper checks against all relevant and up-to-date sanctions lists. 

Mistaken or missing data can lead firms to inadvertently transact with sanctioned entities, while duplicated or irrelevant data can cause false positive rates to spike, slowing down payments and compliance processes. Firms should identify and address any gaps in their data and ideally implement a solution that allows them to receive updates to sanctions lists in real time. 

The post Four ways for businesses to drive innovation while mitigating risk in the age of instant payments appeared first on ComplyAdvantage.

Yet technological advances have reshaped the world around us, opening new cross-border, largely anonymous ways to move money. As a result, governments are applying—and financial institutions are enforcing—a 20th-century solution to a problem that has taken on a new form in the 21st century.

Put simply, sanctions continue to target individual persons or entities when the reality of a highly connected international system is that measures can be circumvented through a network of people or companies that disguise the origins and/or destination of funds. When new, online-only methods of moving money, such as crowdfunding and decentralized crypto exchanges, are added to the mix, the scale and complexity of the problem become clear. The result is a game of “whack-a-mole.” A government sanctions a person. The sanctioned person uses their network to evade the measures. Those individuals are, in turn, sanctioned. New partners or shell companies are found to facilitate further evasion. The cycle continues. 

Concealing more than blemishes 

The impact of this is a lose-lose situation for governments and businesses. Despite years of sanctions on Russia’s economy, the country is selling oil abroad for more than the G7’s price cap, according to the Atlantic Council, which says it uses a “shadow fleet” of 1,000 tankers to ship it. Russia has also continued to import many sanctioned Western goods, accessing them through third countries, including Georgia, Belarus, and Kazakhstan. The International Monetary Fund estimates Russia’s economy grew by 2.2 percent in 2023 and 1.1 percent in 2024 – figures some Western economies would be very happy with. 

To see the impact on the private sector, look no further than Murad, a California-based cosmetics company acquired by Unilever. Before the acquisition, Murad was, according to OFAC, engaged in “an apparent eight-year conspiracy that resulted in the export of services and more than $11 million in goods to Iran on at least 62 occasions.” An executive at the company worked through this time with distributors in the Middle East who exported products to Iran. The company was fined $3.3m, and the executive who facilitated the deal agreed to pay $175,000. 

How did this go undetected for so long? In addition to the complicity of a senior executive, “another contributing factor was the lack of a sanctions compliance program.” Specifically, OFAC found that:

• As primarily a cosmetics company, Murad’s compliance efforts focused on product safety despite the company’s international sales. 
• What compliance reporting structures it later had in place following its acquisition by Unilever US were likewise” inadequate” in relation to the sanctions risks it faced. 
• Compliance reporting lines ran to UK personnel who “lacked an adequate understanding of OFAC sanctions.” 

A mitigating factor of the penalties OFAC applied was the company’s remedial actions, including “developing sanctions and export control policies and procedures, conducting sanctions and export control training for senior management and key personnel, and implementing screening for all parties involved in its international transactions.” 

Murad’s 2023 settlement was just the tip of the iceberg. That year was a record for US sanctions enforcement, with OFAC issuing $1.5bn in penalties. Given how much firms invest in their sanctions programs, would any CEO look at those numbers and believe they’re getting a good return on their investment?

Where do we go from here? 

With so much geopolitical instability, solving this challenge has become more urgent. By funding terrorist groups and rogue states, continued sanctions evasion on the scale we are seeing today will only further undermine the international order. It will also harm economic growth, as businesses sink more money into ineffective programs, only to shell out more on fines—and still more in reputational damage—at the other end.

At ComplyAdvantage, we believe a new approach is needed to the way sanctions are issued and enforced. Reimagining both requires a network view of risk that considers the full scope of a person’s business, financial, and personal relationships.  

• Issuing sanctions: The G7, UN, and major powers like the United States, who drive global sanctions, need to move beyond issuing lists of individuals and ensure measures consider anyone who is one or two “hops” away from the targeted person. While ‘implicit sanctions’ cover individuals and entities not directly named but implicated in a government’s statement, these could and should go much further.
  This could be in the form of a more codified second tier of sanctions—for example, naming and designating connected individuals as “high-risk monitored persons,” ensuring there is no assumption of guilt or collusion but recognizing the increased probability that they could be involved in evasion.While the world is becoming more integrated through the advent of real-time payments, in other ways, it is becoming more fragmented in ways that threaten the efficacy of sanctions. For example, an estimated 10 percent of banks use China’s SWIFT alternative, which unifies payments and banking. Whether by reforming SWIFT or through diplomatic measures, G20 leaders should make securing a unified global payments ecosystem a major strategic priority.

• Enforcing sanctions: Improving enforcement on the front lines in the private sector hinges on two technology-related factors. The first is the need for a compliance platform to aggregate data from multiple, diverse sources to create this network view of risk. Today many firms use separate platforms for various aspects of their compliance program, leading to siloes, misaligned data formats, and the reality that they are not seeing the full picture. The second element is the importance of timely data. Sanctions lists and the relationships between high-risk individuals change not just by the day but by the hour. Sanctions screening solutions that process batch updates every 24 hours leave firms exposed to unwittingly processing a payment to someone who is now on a sanctions list. 

The good news is that, from a technology perspective, a network view of a sanctioned entity’s risk profile is closer than ever. Delivering this 360-degree view of true risk has been a core goal of ComplyAdvantage since I founded the company a decade ago. What we need now is an honest, hard look from policymakers at the efficacy of the sanctions programs they invest so much time and money building – and a recognition that they could achieve much more by reworking them for the world we live in today – not the one we lived through in the last century.

(If you’d like to learn more about the first use of sanctions in 432 BC, check out this article.)

The post A new approach to issuing and enforcing sanctions is critical to their efficacy in the 21st century appeared first on ComplyAdvantage.

With operations spanning key global routes, Hafnia serves a diverse customer base, including leading oil companies, trading houses, and energy sector participants.

The challenges of historical customer screening

Before working with ComplyAdvantage, Hafnia carried out customer screenings with lesser automated systems, which presented challenges for the business. This included delays in obtaining ultimate beneficial ownership (UBO) information from clients unaccustomed to providing it, and with obtaining real-time data on its customers.

We previously had trouble in getting people across the shipping industry to comply and ensure transparency, especially when it came to obtaining UBO data.

Sinclair Coghill, Manager – Compliance and Executive Projects, Hafnia

Given that Hafnia trades in over 100 countries, including high-risk jurisdictions, the company moved forward with implementing an improved adverse media and sanctions screening solution to deepen its understanding of its risk exposure and protect the business from reputational damage. 

In its search for a customer screening partner, Hafnia prioritized ease of use, security, and the ability to access real-time data – factors that led the firm to partner with ComplyAdvantage. Consolidated screenings on a single platform, access to ongoing support, and the potential to develop a customized solution over time were also key in the decision-making process.

A significant improvement in results

ComplyAdvantage’s screening capabilities built upon Hafnia’s risk detection, giving customer risk profiles a granular level of detail and uncovering new business insights.  

Since working with ComplyAdvantage, Hafnia has seen a major boost in productivity. A range of stakeholders can easily use a dedicated customer screening tool, which has reduced onboarding times, false positives, and time spent responding to alerts. 

With ComplyAdvantage, an initial screening search can be completed in as little as five minutes, which is a significant improvement. 

Sinclair Coghill, Manager – Compliance and Executive Projects, Hafnia 

The importance of ongoing support 

Hafnia benefitted from a close working relationship with the ComplyAdvantage team, allowing the company to refine its screening solution based on results. Feedback across the company on ComplyAdvantage’s customer screening setup, functionality, and capability was positive. Stakeholders specifically praised the simplicity of the search functionality, the clear API documentation and supporting materials, and the responsiveness of the ComplyAdvantage team. 

Setup has been very easy, involving only a few 30-minute onboarding calls. The simplicity of the search functionality made it easy to onboard people and explain the necessity of client references and ongoing monitoring. 

Sinclair Coghill, Manager – Compliance and Executive Projects, Hafnia

Hafnia now looks forward to expanding its use of Mesh further, making full use of the available data, and turning compliance into a business advantage. 

The post Hafnia guards against sanctions risks with optimized customer screening appeared first on ComplyAdvantage.

As part of ComplyAdvantage’s State of Compliance 2024 webinar series, industry experts from our Regulatory Affairs team, Anna Stylianou of AML Cube, and Yannick Cherel of Sleek shared their thoughts on the principles and benefits of a layered approach to sanctions compliance. 

This article runs through some of the webinar’s central insights and discussion points, summarized into five actionable tips firms can follow in 2024. 

1. Understand where sanctions risks come from 

Any firm’s starting point for sanctions compliance is its risk profile. Firms should evaluate the risks they will face, considering which products and services carry greater exposure, such as private banking and other services that let customers operate anonymously or independently of oversight. In parallel, firms should consider which customer profiles carry a higher risk level, including customers from high-risk countries or those with a history of involvement in financial crime. FIs operating internationally must also stay aware of differences between the sanctions regimes of different jurisdictions. 

These principles are critical for establishing a firm’s business-wide risk assessment, which should be regularly updated, especially following significant changes in sanctions regulations. The insights gained from this assessment are crucial for crafting a risk-based strategy, enabling firms to direct their resources towards areas of greatest vulnerability. 

This approach highlights the necessity of developing and implementing a customized compliance program. Given the distinct risk landscapes faced by each organization – even those operating within the same industry – it’s clear that a generic, one-size-fits-all solution cannot adequately address the specific needs of every firm.

There’s no one-size-fits-all size solution. Why? There are law firms, they have different risks when they are dealing with their customers. We cannot compare these risks to banks. And we cannot compare the risks of a bank with a casino. So, we understand that all these firms are regulated entities – they must comply with AML and sanctions regulations, and they need to understand their own risks and implement appropriate measures. And these measures cannot be the same. 

Anna Stylianou, Founder & Principal, AML Cube

2. Know what good data looks like  

As new sanctions designations continue to come into force at pace, effective compliance depends on how well organizations can stay informed of these changes. However, not all data providers are the same. Firms can measure data quality and effectiveness using these factors: 

• Accuracy: The data firms use must be error-free to be effective. 
• Currency: Firms should ensure they can access up-to-date information, ideally with real-time updates to sanctions lists. 
• Coverage: Data should come from a wide range of sources across all jurisdictions relevant to the firm and its customers.
• Completeness: Firms should consider which data points they need to make informed decisions on compliance. Names alone are often insufficient to identify targets properly. Dates of birth and addresses are two further data points that can be used to confirm the identities of sanctions targets, but not all sanctions lists include this information.
• Relevance: Irrelevant or duplicated data can cause spikes in false positive alerts. Firms should make sure they only screen customers against relevant data. For example, screening on a particular company should filter out any results from before it was incorporated. 
• Context: Without a holistic view of where and how data has been captured, firms risk using information whose integrity cannot be guaranteed. 
• Networks: Firms should also understand the networks around sanctions targets to recognize attempts to evade sanctions. These relationships can vary in kind – for example, family relationships can also be business relationships – and should be investigated. 

The first stage is understanding the problem that you’re needing to solve. Then you look at, what data do I need to solve that problem? In this case, sanctions risk management. And then make sure that that data is of a sufficient quality and you’ve got all of the relevant data points to solve the underlying problem. 

Andrew Davies, Global Head of Regulatory Affairs, ComplyAdvantage

3. Conduct daily customer screening  

FIs now operate in a world of instant payments, which means for sanctions to be effective, they must be instantly enforceable. 

Under new regulations introduced by the EU in 2024, all payment service providers (PSPs) must be able to send and receive instant payments. Aside from requiring upgrades to many FIs’ payment infrastructures, the new rules oblige banks and PSPs to: 

• Verify whether their customers are subject to sanctions on at least a daily basis. 
• Screen customers against sanctions lists when these lists are updated, rather than during payment execution, to avoid delays. 

In practice, this means a shift towards regular customer screening over transaction screening in sanctions compliance. Firms should make sure they are prepared for this and regularly update their screening process to capture the latest international sanctions information. 

However, this does not mean transaction monitoring is no longer a priority for FIs: it remains an essential tool for detecting unusual or suspicious payment patterns indicating sanctions evasion.

Taking a layered approach to sanctions compliance

Watch our on-demand webinar to explore how implementing multiple, integrated strategies for sanctions compliance can effectively manage and mitigate potential violations.

Watch on-demand

4. Choose the right KPIs 

Once firms have teams and policies in place to meet their sanctions compliance obligations, they need to track how effective they are. This means using the right metrics and KPIs, such as: 

• Volume of alerts raised. 
• False positive rates. 
• Volume of alerts received vs. completed. 
• Referral rate (the volume of alerts escalated to the firm’s second line of defense). 
• How long it takes for sanctions updates to be added to a firm’s system after a government or other issuing authority releases them. 

Senior officers should monitor these metrics for spikes or trends and properly investigate them. For example, if a company sees an increase in false positive rates, this could indicate a need for further staff training, or that their system is not sophisticated enough to ingest a large amount of new designation information at once. 

Your senior leadership should know if there’s been a big spike in alerts for some reason. That could be because of a big batch of new designations, it could be related to some change in the structure of your own customer data which has prompted a spike, but you need visibility of these things so you can have a proper handle on your operational risk. 

Iain Armstrong, Regulatory Affairs Practice Lead, ComplyAdvantage

Clear communication between compliance and commercial teams underlies a strong culture of performance evaluation. Given the commercial function’s focus on sales, compliance officers should check how well they understand their customers so compliance policies are not ignored in favor of growth objectives. 

5. Evolve screening processes with machine learning 

When effective sanctions compliance relies on processing large and complex volumes of data, machine learning (ML) becomes a critical tool for organizations to stay ahead of the curve. ML is useful both for automating lower-risk or repetitive work so human expertise can be devoted to more complicated, higher-risk work, and for deriving insights from data at huge scales beyond manual capabilities. Specifically, there are three main ways ML can help firms with sanctions screening: 

• Securing and curating the right information: This includes collecting customer and transaction data and its sources, validating its integrity with regulators and other authorities, and removing any redundant or duplicated data points. 
• Going deeper with the data: ML models, appropriately configured, can be highly intuitive and granular in their approach. New rules can be added to account for additional information and ensure firms screen customers against relevant data. Examples could cover how common a name is in particular countries, honorifics and other naming conventions, and common words in company names that should be disregarded by matching algorithms (such as ‘consulting’ or ‘enterprises’). 
• Prioritizing sanctions alerts: ML models can be trained on historical data to learn which cases are higher-risk and prioritize these when passing on alerts to compliance teams. This means that rather than simply returning undifferentiated positive alerts, screening software can analyze them and streamline compliance workloads in the process. 

You should focus on exactly where your highest risk is, which will help to train your machine learning or any AI, because that will be helpful for them to understand where you need to prioritize eventually. 

Yannick Cherel, Head of Compliance and Risk, Sleek

When businesses choose a sanctions screening solution, they should thoroughly investigate any claims made around its ML model’s capabilities – not only to test how effective the solution is, but to ensure they can explain how it works. Explainability is not only crucial for building trust among customers but for compliance, given regulators expect firms to demonstrate the reasoning behind their use of a particular software. 

The post 5 ways firms can optimize their approach to sanctions compliance appeared first on ComplyAdvantage.

Navigating the complexities of the international art market presents distinctive challenges for art market participants (AMPs) like Phillips. The primary challenge lies in maintaining the integrity of high-value transactions and safeguarding against money laundering and other financial crimes.

Scrutinizing complex ownership structures 

The auction industry revolves around intricate, cross-border transactions frequently executed by diverse entities, including corporations and trusts. This complexity necessitates an efficient, rigorous customer screening process capable of handling varied ownership structures within the framework of international regulations.

Because a lot of our consignors or buyers are transacting via trusts or companies, that means looking at multiple layers and multiple individuals to make sure that everyone associated with the company, or everyone associated with the client, is somebody we would be happy to transact with.

Susanna Brockman, Head of Service Operations, Europe and International

As a result, Phillips needed a robust customer screening solution that could effectively screen a wide variety of entities and scale with the auction house’s expanding volume of transactions. 

ComplyAdvantage differentiates itself from competitors

Phillips’ decision to partner with ComplyAdvantage for customer screening was initially motivated by the solution’s user-friendly interface and simple data presentation. The ability to consolidate critical data from various sources, including sanctions lists and adverse media reports, was also critical. Following the seamless integration of ComplyAdvantage’s API, and the fact that “minimal training was required,” various members of Phillips’ front-line team were able to get up and running with the solution quickly.

What was really interesting in terms of differentiating itself from competitors was just the simplicity of the presentation. The ability to navigate through the software was really straightforward.

Martin Wilson, Chief General Counsel & Head of Fiduciary Services at Phillips

Operational efficiencies

Since partnering with ComplyAdvantage, Phillips has experienced significant improvements in its customer screening process. The technology has been a game-changer for the company, allowing staff members from the front desk and bids department to conduct swift client screenings with a simple “click of a button.” This has streamlined the registration process for potential buyers and consignors and augmented the screening for money laundering risks, directly enhancing transaction integrity.

Phillips particularly values ComplyAdvantage’s whitelisting capability, which allows the auction house to differentiate between new clients and previously vetted entities or those that require further examination. 

The whitelisting function is really useful to us. Every time we screen a client, the results are a little bit easier to digest and we can rely on ComplyAdvantage results.

Susanna Brockman, Head of Service Operations, Europe and International

Collaborating for success

At first, Phillips’ Chief General Counsel & Head of Fiduciary Services, Martin Wilson, was uncertain about the need for post-implementation communication with ComplyAdvantage. However, Wilson quickly came to appreciate the value of regular discussions with Phillips’ Account and Customer Success Managers. These conversations helped the auction house refine its screening practices according to its risk appetite and business objectives.

The customer success team has been really helpful to us. When we have a question, or we want to explore more sophisticated solutions, or if we want to tweak the way we’re searching, they have offered us some really helpful advice and some useful guidance in helping us streamline what we’re looking for and how we view our results.

Susanna Brockman, Head of Service Operations, Europe and International 

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Implementing a real-time sanctions screening solution can solve this challenge. This can help firms maintain sanctions compliance and reduce the time and cost spent on alert remediation. 

Benefits of real-time sanctions screening

While anti-money laundering (AML) compliance is essential in preventing financial crimes, it is somewhat distinct from sanctions compliance, which focuses specifically on adhering to international sanctions regimes. Real-time sanctions screening is a critical component in this area. It provides immediate risk identification and allows organizations to swiftly flag transactions involving individuals, entities, or countries on sanctions lists. This proactive approach mitigates the risk of processing illicit transactions and ensures FIs remain compliant with sanctions regulations.

This article explores four of the top benefits.

1. Protecting a firm from reputational damage

Reputation is a critical asset for companies, with global executives attributing 63 percent of their company’s market value to its reputation, according to KRC Research. Real-time sanctions screening plays a crucial role in protecting this valuable asset by addressing risks as transactions occur, thus eliminating the need for periodic or manual reviews. This continuous monitoring helps firms avoid both legal penalties and significant reputational damage.

For example, a major FI briefly lost 5.6 percent in the value of its shares after allowing a £250 cash withdrawal by a sanctioned individual, even though the Office of Financial Sanctions Implementation (OFSI) chose not to impose a fine. 

2. Great agility and scope to scale

Real-time sanctions screening can offer unparalleled agility and scalability, allowing firms to adapt swiftly to evolving sanctions landscapes. In an era where global sanctions regimes are becoming increasingly intricate and subject to frequent changes, businesses must stay ahead of the curve to ensure compliance. A real-time solution empowers firms to navigate this complexity without hindering their ambitions for growth and expansion into new markets. By continuously monitoring transactions and updating sanctions lists in real-time, FIs can identify and mitigate risks promptly, regardless of their scale or geographic footprint.

Moreover, the scalability of real-time screening solutions allows firms to accommodate growing transaction volumes without compromising on efficiency or accuracy. As businesses expand their operations, they need robust compliance measures that can keep pace with their evolving needs. Real-time screening platforms offer the scalability necessary to handle increasing transaction volumes while maintaining the same level of effectiveness in identifying potential sanctions violations. This scalability ensures that FIs can scale their operations seamlessly without being weighed down by compliance concerns, thus enabling them to pursue their growth objectives confidently in a dynamic regulatory environment.

3. Improving sanctions screening efficiency

Real-time screening brings a proactive dimension to the due diligence process, empowering organizations to continuously monitor transactions and customer profiles. This can help quickly identify any associations with sanctioned entities, meaning potential risks are spotted as soon as they emerge, enabling timely intervention and mitigation. 

Solutions that are API-led offer further efficiency gains, as firms can integrate the software seamlessly into their compliance workflows. Such solutions can also be tailored to align with a firm’s risk appetite and compliance requirements. They can adapt to varying transaction volumes, different customer segments, and evolving regulatory landscapes. This adaptability ensures that organizations can efficiently and effectively target potential violations to suit their unique needs.

4. The moral imperative

The impact of robust sanctions compliance extends beyond regulatory requirements, directly influencing geopolitics and international relations. By swiftly identifying and blocking transactions involving sanctioned individuals and entities, real-time screening systems contribute to cutting off the flow of funds to those engaged in illicit activities or human rights abuses. This not only bolsters global efforts to combat financial crime but also promotes accountability and justice on a global scale.

By preventing the movement of funds by sanctioned entities, real-time screening helps curb bad actors’ ability to finance destabilizing activities or circumvent sanctions imposed by the international community. This contributes to a more stable and secure global financial system, fostering trust and cooperation among nations. Ultimately, the implementation of effective sanctions screening measures aligns with broader humanitarian and ethical principles, as it deprives oppressive regimes and illicit actors of the resources they need to perpetuate injustice and harm.

Advanced real-time sanction screening solutions

In the face of constantly changing sanctions lists and increased regulatory expectations, organizations must adopt a risk-based approach to sanctions compliance. Recognizing that a minimalistic approach to detecting potential sanctions exposure is no longer sufficient, 44% of firms surveyed for our State of Financial Crime 2025 report identified a lack of real-time risk visibility as their biggest barrier to compliance. 

Firms should assess the challenges their current screening software poses and consider the advantages of implementing a sanctions risk management solution with real-time screening capabilities.

ComplyAdvantage’s watchlists and sanctions screening software offers the following benefits to firms: 

• Up to 83 percent reduced onboarding times by customizing the sanctions screening program according to a risk-based approach. 
• Up to 66 percent increased straight-through processing through automated flows via our API and granular data segmentation.
• Reduced false positives. 
• Automated ongoing monitoring by eliminating delayed flat file uploads. 
• Integration with existing tools by connecting data feeds, case management systems, and CRMs to match existing workflows through industry-leading API integration.

The post Top 4 benefits of a real-time sanctions screening solution appeared first on ComplyAdvantage.

This article presents five tips for compliance leaders to consider when selecting the best sanctions screening software for their company.

1. Ensure the software is comprehensive and future-proof

When evaluating sanctions screening software, a meticulous analysis of its key features will form the cornerstone of a thorough assessment. Among these features, real-time screening is paramount, offering organizations the critical capability to respond promptly to evolving threats. Complementary to this, fuzzy matching functionalities can contribute to the precision and accuracy of the screening process, mitigating the risk of overlooking potential matches. Equally, the software’s ability to manage false positives effectively can directly influence a firm’s operational efficiency and resource allocation, and configurable rules further enhance adaptability, enabling organizations to tailor the screening tool to meet their specific requirements.

However, beyond the technical functionalities, a forward-looking perspective becomes essential. When analyzing the key features of sanctions screening software, organizations should confirm if the solution will serve the roles of all key stakeholders in their fraud and AML (FRAML) program, including analysts, team leaders, and chief risk officers. Specifically, firms should ask if the solution empowers users to implement role-based access.

Automation, a linchpin for cost-effective compliance, introduces a practical dimension to the evaluation process. Identifying repeatable tasks and assessing the extent to which the solution automates these tasks are pivotal considerations that directly impact overall operational efficiency.

Moreover, the software’s alignment with a risk-driven approach is a crucial aspect of the analysis. Organizations must scrutinize the software’s capacity to implement risk policies effectively, dynamically score customer and case risks, and seamlessly integrate into existing workflows. This ensures a holistic and proactive risk management strategy.

Considering the broader workflow, the evaluation extends to whether the chosen software provides a comprehensive screening solution or necessitates additional tools from different vendors. Opting for a platform-based approach can prove advantageous, fostering a unified view of customer risk across various workflows and business units. This approach streamlines processes, triggering automatic responses, such as enhanced monitoring, based on outcomes from transaction monitoring.

2. Determine the sanctions screening data available

To ensure effective sanctions screening, it is important to determine the vendors’ available data and ensure the software has appropriate data integrations to cover the jurisdictions and territories where a firm operates and provides services. Ideally, firms should prioritize vendors that offer a combination of software and proprietary data. This approach provides several benefits, including the ability to avoid shopping around and maintaining multiple vendor relationships and contracts. For larger financial institutions, the procurement exercise alone can cost hundreds of thousands of dollars.

Another advantage of sourcing both the software and data from a single vendor is that the software and data are closely linked from the start. The software is built to navigate through the data better, send feedback to the data algorithms, and perform other useful functions.

However, it is also crucial to prioritize the quality of data, not just the quantity. Outdated records can contribute to high volumes of false positives, rendering screening against real-time risk much less effective. Rather, firms should consider partnering with a vendor that uses teams of global data experts to review and edit problematic profiles to ensure the AML/CFT data acquired by machine learning algorithms is accurate and up-to-date.

3. Make sure the software is compliant with the AML regulations

Since non-compliance with sanctions regimes can lead to hefty fines, reputational damage, and legal repercussions, finding a screening solution that aligns with AML regulations will be top-of-mind for compliance teams. A key aspect to look out for when assessing multiple sanctions screening solutions is the software’s ability to access and incorporate updated sanctions lists from reliable sources. These lists, maintained by government agencies and international bodies, include individuals, entities, and countries subject to sanctions or restrictions. By accessing up-to-date lists, the software can help firms stay ahead of regulatory requirements and minimize the risk of inadvertently engaging with sanctioned entities.

In particular, features like automatic updates and alerts for changes in sanctions lists should be prioritized, as they can help enhance compliance efforts and enable proactive risk management. 

4. Consider the integration and technical aspects

How vendors implement their clients’ AML programs is critical. A slow implementation process risks undermining the customer experience and delaying the roll-out of new products and services. Poor support over time can become a chronic issue weighing compliance teams down if, for example, the ability to add new rules and capabilities is impacted. But what does ‘good’ look like regarding integration, and what technical aspects should be prioritized? 

• Compatibility and integration: Senior decision-makers should make sure to evaluate how well the software is integrated with their firm’s existing systems and assess the level of support the vendor will provide during the integration process to ensure a smooth transition without disruptions. 
• Scalability and performance: Ensure the software can handle increasing data volumes and transactions as your business grows, ensuring it meets operational requirements without compromising performance.
• API response times: Check for fast and consistent API response times to minimize transaction processing delays and ensure seamless operations. 
• UI and UX: Assess the user interface for intuitiveness, ease of navigation, and accessibility, looking for features such as customizable dashboards and multi-language support to enhance user productivity. 
• Configurability: Look for a high degree of configurability in screening rules, alert thresholds, and risk parameters, enabling easy adaption to evolving compliance requirements without extensive technical support.   

5. Check the vendor’s reputation

Finally, it’s important to choose a reliable vendor in the industry to ensure business continuity and increase operational resilience. Securing comprehensive software, good data, and the right price doesn’t guarantee a sustainable relationship with a vendor. The quality of support the vendor is able to offer, if and when a firm needs it, is what underlines this. 

Even if assistance isn’t verbally requested, would the vendor still seek to help compliance teams make the most of the solution in improving their efficiency and reducing their risk and cost of compliance? There will be times when unusual reports or a unique screening feature is required. Will they provide the necessary support then (and with a smile)? These are the things that make the vendor-customer relationship a happy one. The best way to check this before becoming a customer is to connect with the vendor’s existing customers.

Sanctions Screening with ComplyAdvantage

Hundreds of FIs worldwide rely on ComplyAdvantage for a sanctions screening solution. Whether they’re conducting thousands of checks a month or less than a hundred, they benefit from:

• Fully automated screening and monitoring that pushes system-wide updates every hour based on global sanctions lists, watchlists, adverse media, PEPs, and warning lists.
• A completely integrated experience that combines data feeds, search, and case management into a single workflow and reduces onboarding time by up to 83 percent.
• A 66 percent increase in straight-through processing through automated flow via RESTful API and granular data segmentation that removes tens of thousands of false positives.
• Consolidated entity profiles where a single alert is generated with all the information needed to make an informed decision.
• A better workflow to assist everyday reporting, where data feeds, case management systems, and CRMs are integrated to match your workflow.

The post 5 tips on how to choose the best sanctions screening software appeared first on ComplyAdvantage.

However, many businesses face challenges implementing effective and scalable sanctions screening processes. This article explores the reasons behind these challenges and provides five best practices for effective sanctions and watchlist screening.

Challenges related to sanctions screening systems

Like many other AML/CTF processes, sanctions and watchlist screening can put intense pressure on compliance teams. For example:

• Screening protocols are a significant part of the workload of busy compliance professionals who need to balance regulatory requirements with pressure from product and engineering teams trying to optimize the quality of experience the business delivers.
• As businesses scale to new jurisdictions, the burden on those conducting checks also grows. Businesses don’t always have a clear answer for streamlining these processes; instead, they make do with outdated technology and convoluted workflows.
• Even as employees face the challenge of more alerts and false positives, regulators continue to expect robust documentation and auditability across the board.
• Firms often encounter the challenge of having to swiftly update their sanctions screening lists following rapid changes to desigations worldwide, necessitating a proactive approach to compliance.

Without the right technology and processes, sanctions screening can quickly become another weight around the neck of FIs that are often trying to compete at the pace of global competitors.

5 steps to set up an effective sanctions screening process

Given the importance of sanctions and the potential cost of noncompliance, firms should be familiar with sanctions screening best practices to ensure their AML/CFT programs deliver the required results.

1. Align sanctions screening with a risk-based approach

Aligning sanctions screening with a risk-based approach (RBA) involves tailoring the screening process to prioritize higher-risk areas. This means assessing the potential risks associated with different business activities, customers, or transactions. 

By understanding the specific risks, organizations can allocate resources more efficiently, ensuring sanctions screening efforts are concentrated where they are most needed. This approach allows for a more targeted and effective screening process, addressing the varying levels of risk across different aspects of the business. However, adopting a risk-based approach to compliance does not equate to being risk-averse. Instead, it signifies a strategic shift towards a more nuanced understanding of risks and their implications. 

Analysts are increasingly recognizing the importance of financial inclusion and the unintended repercussions of stringent sanctions. For example, in the case of countries like Afghanistan, humanitarian aid is sorely needed but is often restricted due to sanctions. The Financial Action Task Force (FATF) emphasizes the significance of financial inclusion, cautioning against overly risk-averse AML measures that inadvertently exclude legitimate businesses and consumers from the financial system. Instead, the FATF advocates for the development of risk-sensitive AML frameworks, viewing it as a crucial step for countries aspiring to cultivate a more inclusive formal financial landscape. Such frameworks not only ensure access to appropriate financial services for a broader spectrum of the population but also extend assistance to the most vulnerable and underserved groups.

2. Prioritize how data is viewed – not just  what data is viewed

Compliance teams often have to contend with outdated, inaccurate, and duplicated data spread across disparate systems. In such scenarios, hastily implemented sanctions screening processes inevitably produce false positives and waste time.

To set up a sanctions screening protocol that’s both effective at identifying matches and scalable, compliance teams must have access to a single, comprehensive profile of each customer, populated with only the most relevant screening results. An intuitive interface begets an intelligent process.

3. Zero in on the right lists at the right times

A big part of the challenge with sanctions, watchlists, and even politically exposed persons (PEP) screening is the sheer volume of lists that can be monitored globally. Businesses need to filter this global plethora to screen against lists that apply to their jurisdictions, customers, and products.

However, more needs to be done to streamline the screening process. So, it’s also important to use software to automate sanctions screening to ensure compliance teams can set risk-based alerts based on specific intervals and differentiated risk-screening levels from the onboarding phase onwards. Moreover, firms should consider how often their sanctions lists should be updated to ensure the data the software is screening against is up-to-date. To ensure excellent data quality, firms may also consider using human experts to verify any sanctions list updates, using something akin to a 12-eye review process. 

4. Integrate the right controls for rapid remediation

Efficiency and productivity are major challenges facing compliance teams. Precious time is lost when analysts switch between multiple systems to gather needed information or wait for responses from external teams or contractors. By integrating controls across disparate systems, firms can greatly improve the speed of critical onboarding and remediation processes, satisfying customers, relieving employees, and protecting themselves from risk, all with a few simple API integrations.

The integration allows compliance teams to benefit from a single, automated source of information and communication within their own platforms. This, in turn, can streamline important case and manual review decisions.

5. Conduct a comprehensive audit 

Finally, conducting a thorough audit of the sanctions screening process is essential to ensure its effectiveness, efficiency, and compliance with regulatory requirements. This process should begin with documenting each step of the screening process, from decision-making criteria to data collection and verification. Next, the adequacy of the screening technology and software should be assessed, examining its capabilities in terms of speed, accuracy, and scalability. Additionally, the roles and responsibilities of personnel involved in the screening process should be reviewed, providing adequate training where necessary to enhance their understanding of sanctions compliance protocols.

Following the documentation and evaluation phase, compliance teams may choose to conduct a comprehensive gap analysis to identify any weaknesses or areas for improvement in their sanctions screening process – such as data quality, technology infrastructure, and compliance. This involves comparing current practices against industry best practices and regulatory requirements. Once gaps are identified, they should be prioritized based on their potential impact on compliance and risk mitigation. A remediation plan can then be developed that outlines specific actions to address each gap, assigning responsibilities and timelines for implementation. These efforts should be regularly monitored to ensure continuous improvement and maintain a robust sanctions screening process over time.

Automation in the sanctions screening process

Even in smaller FIs, the sanctions screening process can prove to be a non-trivial burden on compliance teams. But this vital process can quickly get out of hand when a business scales to oversee hundreds of lists for thousands of clients conducting millions of transactions a year. It can hurt the customer experience, expose the business to unnecessary risk, and make compliance even more challenging than it needs to be.

This is why automation and software have come to play such a critical role in the most effective sanctions screening processes. As firms adopt more intelligent ways to serve their customers, it only makes sense that they should also adopt more intelligence to manage the risks behind these services.

With ComplyAdvantage’s fully-automated sanctions and watchlists screening software, firms can:

• Minimize false positives. 
• Quickly learn about critical changes to a customer’s risk status.
• Automate ongoing monitoring by moving away from delayed flat file uploads.
• Reduce onboarding cycle times by tailoring the sanctions screening program to an RBA.
• Streamline customer onboarding by improving alert quality with a consolidated, real-time AML risk database.
• Sync with existing tools by integrating data feeds, case management systems, and CRMs to match existing workflows via industry-leading API integration.

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