Sanctions are restrictions imposed by countries or governments on others to achieve specific goals without using force.
Implementing an effective sanctions compliance program is crucial as the consequences for non-compliance can result in severe penalties and reputational damage.
The Office of Foreign Assets Control (OFAC) suggests five key elements for such a program:
1. Senior Management Commitment:
- Senior Management’s approval and support are essential for an effective sanctions program
- Appoint a sanctions officer and ensure the compliance unit has authority, autonomy, and necessary resources.
- Foster a culture of compliance and emphasize the seriousness of potential violations.
2. Risk Assessment:
- Assess inherent risks based on clients, products, services, and geographic locations.
- Enable risk-based decision-making and identify the level of due diligence required.
- Regularly update the risk assessment to address emerging risks.
3. Internal Controls:
- Establish policies and procedures to identify, detect, and report prohibited activities.
- Define clear expectations for the sanctions compliance program.
- Enforce policies, address weaknesses, and subject internal controls to audits.
- Maintain adequate record-keeping procedures to meet regulatory obligations.
- Communicate the program to relevant staff and integrate it into daily operations.
4. Testing and Auditing:
- Conduct comprehensive and objective testing to identify weaknesses.
- Ensure accountability to senior management.
- Deploy qualified personnel with expertise, skills, and resources for audits.
- Provide periodic employee training, at least annually.
- Deliver job-specific knowledge, communicate responsibilities, and assess comprehension.
- Include clients, suppliers, and business partners as necessary.
- Tailor training to products, services, customers, counterparties, and locations.
- Address specific findings and make materials easily accessible.
By incorporating these elements into your sanctions compliance program, you can not only mitigate effectively non-compliance risks but also demonstrate your commitment to regulatory compliance.