Financial firms have made progress in preventing sanctions breaches, but serious gaps in governance and compliance remain, which are likely to result in keener regulatory scrutiny and potentially more penalties in the future, say experts.
Since February 2022, the Financial Conduct Authority (FCA) has assessed the sanctions systems and controls of over 150 firms across the sector. But its latest review is far from complimentary. While those firms reviewed generally have strong controls in place to enable them to identify potential sanctions breaches before they occur, the regulator highlighted several areas for concern, with the most common root causes of reported breaches being down to weaknesses in due diligence, alert management, transaction and name screening, the management of frozen assets, and compliance with licenses.
