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Making sanctions effective: Key themes for banks


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Making sanctions effective: Key themes for banks

European banks face a mammoth sanctions-compliance challenge in the wake of Russia's invasion of Ukraine and ensuing sanctions. An increasingly complex sanctions landscape and a significant operational burden on financial institutions have raised the risk that sanctions lead to negative unintended consequences.

The latest Banking Essentials Webinar, co-hosted by S&P Global Market Intelligence and the European Banking Federation, explored how banks and regulators can better implement sanctions to ensure they achieve the intended objectives while easing the operational challenge for banks.

"This is probably one of the most challenging times for sanctions professionals," said Eduard Hovsepyan, policy adviser on anti-money Laundering and financial sanctions at the European Banking Federation, speaking at the webinar.

Implementing sanctions related to Russia is not a new task for the financial industry – Western sanctions have been in place against the country since it annexed Crimea in 2014. But the unprecedented scale of sanctions imposed in recent months, including the new types of measures and the divergence between nations' approaches, have added further complexity for those banks exposed to Russia, Hovsepyan said.

Adopting new technology and enhancing public-private cooperation are key measures required to make sanctions effective, according to the webinar speakers.


Banks making progress on technology

Financial institutions are already adopting new technology into their sanctions-compliance processes, but more can be done.

Almost half of webinar attendees said new technology such as machine learning and artificial intelligence have made some difference in their sanctions-compliance processes but not enough. Some 17.2% said new technology had made a significant difference, while 15.6% said it had not helped to ease sanctions compliance at all.

Have your sanctions compliance processes been helped by new technology such as machine learning and artificial intelligence?

Yes, technology has made a significant difference


Yes, but not enough




Don't know/not sure



"Technology certainly is an enabler and will drive efficiencies as we look to implement these sanctions and bring the conflict to an end," said Alem Husain, director in the new product development team at S&P Global Market Intelligence, speaking at the webinar.

Banks have made notable progress in adopting new technology in their customer profile screening and outreach, for example by using artificial intelligence-based solutions for smart extraction of data and facial recognition in onboarding processes, said Husain. The advancement of sentiment analysis models has also eased banks' ability to conduct adverse media screening, he added.

Meanwhile, within anti-money-laundering and disambiguation screening, there is still much room for technology to help banks reduce the "huge amount of false-positive results" generated by systems today, said Husain.

Restrictive personal data protection interpretation by national data protection authorities or legacy systems are among the main barriers to banks widely adopting these solutions, said Hovsepyan.


Intelligence sharing and public-private partnerships

Enhanced public-private collaboration is another key measure to ensure that sanctions yield the desired outcomes. Sanctions differ from other foreign policy tools in that private sector actors, especially banks, are at the forefront of the battlefield, Hovsepyan said. Political leaders impose the sanctions, while banks are responsible for their practical implementation.

"It's not fair to leave the private sector to lead this battle alone. And that's why cooperation, in particular public-private cooperation, is of the utmost importance to make the sanctions work and be effective," he said.

Public-private partnerships allow for better feedback between banks and policymakers: banks can communicate implementation challenges and potential grey areas and deficiencies to policymakers, who in turn can provide guidance or amend the legal text to make it more effective, said Hovsepyan.

The Europol Financial Intelligence Public Private Partnership project, which is already providing a forum for banks, national enforcement agencies and Europol to exchange information related to combating and preventing financial crime, is one example of a partnership that is helping to prepare and inform banks on sanctions, he said.

To gain even more insight, watch the entire webinar replay -  'Navigating sanctions: Overcoming the challenge facing Europe's banks'

Find out more about S&P Global Market Intelligence solutions to help navigate sanction requirements here or to speak to an expert, click here.