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Best Practice Approaches to Economic Sanctions and Related Securities

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Economic sanctions can pose difficult data management and compliance problems, particularly at the securities level, but automated services that identify and manage securities related to sanctions can help firms improve compliance and avoid penalties for breaches.

The challenges of effective sanctions data monitoring, as well as the opportunities of getting this right, were discussed during a recent A-Team Group webinar. The webinar was hosted by A-Team editor Sarah Underwood and joined by David Savage, senior associate in the fraud and investigations group at Eversheds; Sean Friedly, senior manager and head of financial crimes management governance at Raymond James Financial; and Alexander Dorfmann, senior product manager at SIX Financial Information.

The panel members outlined the scope of sanctions, including asset freezes, limits on using assets, restrictions on entities accessing financial markets and trade sanctions, and noted that sanctions are put in place to change the behaviour of certain domiciles, entities and individuals, and secure international peace. Looking at sanctions breaches, the panel noted not only huge fines, but also the likelihood of reputational damage.

Considering the extent of sanctions and penalties, a poll of the webinar audience asked how effective organisations are when dealing with sanctions. Some 40% of respondents said their organisations were somewhat effective, 33% said their organisations were very effective, and 27% suggested their organisations were not as effective as they would like to be.

How financial firms manage official sanctions lists depends in great part on their size, with large firms typically managing them in house, and smaller firms relying on third-party services, although it should be noted that responsibility remains with the firm.

Beyond sanctions and other watch lists, identifying securities related to sanctioned domiciles, companies or individuals requires firms to discover and manage all securities related to sanctions lists, including owners of securities and regimes in which the securities are sanctioned, on a daily basis.

The panel suggested this can best be done using automated services that monitor sanctions and identify and manage affected securities. An audience poll considering the benefits of automated services showed favourable results, with 89% of respondents saying they could increase operational efficiency, 78% saying they could improve sanctions compliance, and 67% saying automation could help them avoid penalties for breaches.

Listen to the webinar to find out about:

  • The scope of sanctions
  • Extent of penalties for breaches
  • Challenges around sanctioned securities
  • Automated service solutions
  • Benefits of automation
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