Highest level of U.S. sanctions levied against narcotics, compared with the EU which prioritises terrorism
Research by Accuity, the leading global provider of financial crime screening, payments and know your customer (KYC) solutions, has found that the sanctions issued by Her Majesty’s Treasury (HMT) in the UK are still very closely aligned to those issued by the European Union (EU). Neither jurisdiction has kept pace with the United States, where the Treasury Department’s Office of Foreign Assets Control (OFAC) has now sanctioned almost 40% more entities compared to five years ago. Entities relating to narcotics trafficking make up the greatest proportion of the OFAC list (25.5%), whereas in the EU, the largest subset of entities are related to terrorism (25.2%).
The data, which was analysed by Accuity based on information collected by its risk data team, show that sanctions lists have been evolving rapidly throughout 2019. Their evolution provides insight into current foreign policy issues, with recent cases highlighting the fast pace at which sanctions can be imposed and withdrawn.
For example, the U.S. issued sanctions against several Turkish entities in response to the country’s military action in Northern Syria on 14th October 2019, only to waive them nine days later. The frequency of change creates challenges for organisations responsible for conducting financial crime screening, necessitating access to refreshed lists and automated screening technology to eliminate gaps in coverage.
Data from November 2019 shows there were 8,957 entities included on the OFAC list, compared to 2,147 for the EU, 2,126 for the UK and 1,054 for the United Nations (UN). Over a five-year period (November 2014 to November 2019), U.S. sanctions have risen by 39.3%, while the EU, UK and UN lists have decreased by 19.1%, 17.5% and 5.8% respectively.
The variance can, in part, be attributed to differing stances on the Iran Deal, amongst other geopolitical issues driving the U.S. agenda. Since the beginning of the current presidential term, the data shows a significant rise in the use of sanctions by the U.S., from 6,656 entities in January 2017 to 8,957 in November 2019 (an increase of 34.6% in under three years).
2018 was a record year for U.S. sanctions, with approximately 1,500 entities added to the OFAC list; while in 2019, enforcement action has reached unprecedented levels, with OFAC issuing more than 20 civil penalties and settlements, of a combined value of almost $1.3 billion USD. The enforcement decisions provide insight into the scope and depth of sanctions compliance requirements and the broad range of industries penalised makes it clear that no economic sector is beyond OFAC’s reach.
Vincent Gaudel, compliance expert at Accuity, commented: “Our analysis reveals trends in the use of sanctions for a wide range of foreign policy issues, from the political crisis in Venezuela to the international fight against terrorist groups. The numerous OFAC enforcement actions published in 2019, affecting multiple sectors, show just how critical it is for financial institutions and corporations to have an effective sanctions compliance process in place.”
Saskia Rietbroek, executive director at Association of Certified Sanctions Specialists, added, “The current regulatory momentum is creating new challenges for firms that shoulder the responsibility for screening their customers and transactions – and face hefty penalties for non-compliance. Since OFAC first started publishing fines, companies like the New York Yankees, Playboy Enterprises and Walmart have settled over charges of illegal trading with sanctioned countries or persons. Sanctions compliance is not just about filling out government forms; it is about criminal laws and potential 20-year prison terms.”
For more information, please contact:
Imogen Nash, Accuity
Tel: +44 (0)20 7911 1379
Francesca Bliss, Cognito
Tel: +44 (0) 20 7426 9400
Notes to Editors:
Accuity offers a suite of innovative solutions for payments and compliance professionals, from comprehensive data and software that manage risk and compliance, to flexible tools that optimise payments pathways. With deep expertise and industry-leading data-enabled solutions from the Fircosoft, Bankers Almanac and NRS brands, our portfolio delivers protection for individual and organisational reputations.
Part of RELX, a global provider of information and analytics for professional and business customers across industries, Accuity has been delivering solutions to banks and businesses worldwide for 180 years.