GRC Professional - February 2015 Edition | Page 16

The new normal in
sanctions compliance
Sanctions compliance has become the hot topic within the AML world. What
are the biggest challenges of the current sanctions environment? GRC Professional
speaks with Mark Dunn, a sanctions expert with LexisNexis in London.

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n mid-February, French Foreign Minister Laurent Fabius announced that
proposed sanctions against a list of
nineteen individuals and nine entities
in Russia have been agreed, in principle, by
EU foreign ministers at the Foreign Affairs
Council. The sanctions were imposed for the
ongoing situation in Ukraine.
It was an expansion of one of the most economically-significant sanctions regimes that
the world has seen. Russia is clearly the largest and most economically-integrated country
to be caught in sanctions. The intention, of
course, is to harm President, Vladimir Putin’s
closest supporters, but there have been knockon effects far beyond the Kremlin. These are
having a significant impact on many western
businesses and industries.
In February, LexisNexis reported that, “a
more indirect consequence of these sanctions
has been Russia’s decision to ban all imports
of EU dairy products. The ban has meant that
2.5 billion litres of milk, produced specifically
for export to the Russian market, has been left
unsold, and Russia has stated clearly that this
will continue until the sanctions are lifted.”
Mark Dunn is the Segment Leader for Due
Diligence at LexisNexis. He says companies
really need to be on their game because Russia
being involved in a sanctions regime is a massive strategic change.
“There is a lot more international investment in Russia than other countries that have
been subject to sanctions. If you are invested
in Russia, you are going to have really deter14 GRC Professional • February 2015

mine how you are going to respond to this
changing environment.”
Since the imposition of Russian sanctions,
a lot more companies have had to get up-tospeed with sanctions compliance. It is a difficult and ever-changing area of compliance.
Dunn says that financial services firms are
more comfortable with sanctions, because
they have been managing this for a long time.

If financial sanctions are imposed,
very quickly the ability of that
country to conduct business is
narrowed.
“The financial services sector is often
targeted, so the ability for the country to conduct business is curtailed. If financial sanctions are imposed, very quickly the ability
of that country to conduct business is narrowed,” Dunn says.
But the net is now wider. “Targeted sanctions look at advanced infrastructure like energy, mining, aerospace. In those cases, they
are targeting large and very important industries for that economy,” Dunn says.
“Non-financial sanctions have become a
really big area, recently. Companies that have
not, in the past, been subject to these measures
are now subject to sanctions regimes. There is
a much bigger focus in the corporate world.”
“For example, you might have an energy
company that has a trading arm in commodities. That immediately brings them under the
regime, through the financial regulator. In

that case, they have the same responsibility as
the banks.”
“But increasingly beyond that, there have
been a number of oil for food scandals in I