min read

Sanctions imposed on Russia are futile without proper AML checks

Published on
March 28, 2024
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Russia's actions in Ukraine have resulted in the most significant and most severe package of economic sanctions ever seen. Multiple individuals and entities are being denied access to financial and capital markets. Thus, regulated companies with robust AML, KYC and KYB processes and meticulous PEP and Sanctions checks constitute the sentries helping to expose and prevent individuals and entities from circumventing the financial restrictions.

PEP and sanctions screening crucial in times like these

In consequence of the Russian invasion of Ukraine, the EU countries, the US, Canada, and the UK, have adopted extensive sanctions intended to isolate Russia from the global economy. The sanctions target individuals and organisations, including members of the Russian elite and their family members, major Russian banks, and the country's national security council. These unprecedented sanctions are meant to apply pressure to President Vladimir Putin for waging war on Ukraine in violation of international law. The western sanctions imposed on Russia essentially make it illegal to allow money to flow to or from sanctioned people, entities, and industries. For these sanctions to be utterly effective, all companies in regulated sectors must do their part by undertaking adequate due diligence and continuous monitoring to notice and flag persons or entities on a politically exposed person’s (PEP) list or a sanctions list.

Individuals and entities cut off from the global economy may attempt to circumvent or evade detection by using trusts, shell companies, nominee shareholders, or other complex methods. Therefore, regulated companies need to have competent and efficient Know Your Customer (KYC) and Know Your Business (KYB) processes that meet Anti Money Laundering (AML) requirements in place in helping to expose and prevent sanctions avoidance. The processes for client onboarding, due diligence, and monitoring at regulated entities such as financial institutions play a crucial role in running PEP and sanction checks and preventing individuals and entities from evading the restrictions imposed by sanctions.

PEP person

Digitisation, automation, and orchestration is pivotal to sanctions compliance

Considering recent world events, KYC and KYB processes and sanctions compliance has become increasingly important. As new sanctions are being imposed continuously, companies that still utilise obsolete manual checking methods for PEP and sanctions screening will find it hard, if not impossible, to keep pace and comply with regulations. Such corporate shortcomings regarding AML measures may have a negative impact on the effectiveness of the current financial sanctions imposed on Russian actors. Regulated companies that haven't invested in digitalisation and automation solutions for regulatory compliance yet can expect extra resource-intensive and time-consuming workloads in times like these since breaches of economic sanctions are a severe offence. Non-compliance may lead to hefty monetary fines, imprisonment, or both.

Significant PR downsides and the probability of individual liability are also imminent when breaching the financial prohibitions. Whether the participation was inadvertent, due to ignorance or knowingly is irrelevant in the eyes of the law and to the general perception. The current situation vividly underlines that digitisation of regulatory compliance processes, automated KYC/B checks, and workflow orchestration is nearly a mandatory investment for regulated organisations.


Amplify and future-proof your AML compliance with ZignSec

ZignSec provides PEP and sanction checks that serve as a robust and effective integral piece of carrying out an initial risk assessment on individuals and entities and enable effective ongoing monitoring. We consolidate verified lists from global PEP databases, Government Sanction Lists, Anti-Terrorism Lists, CIA Lists, and customised geographic lists. Organisations with real-time access to such a range of comprehensive international watchlists can rest assured that any new clients being screened will be flagged if they're newly sanctioned individuals or entities. When new sanctions are introduced, e.g., against Russian individuals and entities, our platform immediately updates the sanction and PEP screening lists when there are changes. Regarding ongoing monitoring for organisations connected to our platform, all their existing relationships on the sanction or PEP lists can be flagged without the need for a new search.

ZignSec's one-stop-shop platform proffer an all-inclusive aggregate supply of global and local compliance software solutions and services that meet AML, KYC and KYB requirements. Our platform act as an orchestration layer for all the workflows, processes and compliance solutions that affiliated organisations can acquire and employ via a single API connection. Orchestration enhances the entire compliance process sequentially as many of the automated checks can be run simultaneously, creating a seamless real-time customer experience. We facilitate the challenges of different legal requirements and methods of untangling complex ownership structures, finding available information on UBOs (Ultimate Beneficial Owner), etc. Organisations can utilise ZignSec as their sole regulatory compliance solutions provider and customise workflows and compliance checks according to operative needs and regulatory requirements.

Affiliated organisations can seamlessly integrate corporate reviews into their onboarding workflow and automate and accelerate onboarding at a previously unimaginable scale. We fortify the proficiency, efficiency and accuracy of your organisation's client onboarding, customer due diligence, and monitoring procedures. By connecting with ZignSec, your organisation adopts a holistic approach to regulatory compliance with end-to-end client lifecycle management. With our customisable workflows, flexible orchestration and aggregate supply of compliance solutions continuously updated, your organisation future-proof its AML compliance program domestically as well as cross-border.

Contact us at sales@zignsec.com today to learn more or book a demo.

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