The Challenges of Sanctions Compliance in a Shifting Landscape

Due to today’s political climate and ever-changing regulatory landscape, companies and organizations are facing quite a few challenges in their compliance departments. Running a global compliance sanctions program comes with specific obstacles and fintech companies specifically, are dealing with them.

In our latest chat series, ‘Spilling the Tea with Compliance’, we’re joined by Payoneer’s Senior Director of Compliance, Aramara Miranda Leal along with industry experts Karla Worley, VP Business Development at RDC and Anders A. L. Rodenberg, Head of Financial Institutions & Advisory, Americas Region, BvD to discuss how fintech companies are dealing with the complexities of global sanctions and jurisdictional challenges.

Watch the full episode below!

Challenges of Sanctions Compliance in Global Commerce

As sanctions are becoming increasingly popular in more and more regions around the world, fintechs and financial services companies are devoting a lot of attention to sanctions compliance as they navigate a shifting regulatory landscape that is constantly changing and is sometimes, a bit unclear. As businesses around the world continue to expand globally, there are still challenges of handling local regulations which again, creates a massive challenge for the business.

One challenge that seems to occur often is that global sanctions lists tends to change very frequently, leaving many fintech companies struggling to find new solutions to keep up with the changing regulatory landscape. Another challenge is ensuring your company is not facilitating trade to sanctioned countries via third parties and having a proper global sanctions program within your organization to carefully evaluate transactions can prevent that from happening. Lastly, fintechs are facing challenges when evaluating and screening entities that are owned 50% or more by blocked individuals under the Office of Foreign Assets Control (OFAC) which we’ll dive into below.

The OFAC 50% Rule Also Known as the 1% Rule

The OFAC 50% rule refers to a list of companies or individuals who are on the global sanctions list, but anything they own with more than 50% is deemed as sanctioned as well and identifying this could be a challenge as many companies also have subsidiaries.

In general, most companies and large organizations typically have very complex structures and the 1% (doesn’t add up to more than 50%) can make the difference between a company being sanctioned or not. Just as sanctions change quite often, so does ownership of companies which can be tough to keep up with.

To learn more about the challenges global sanctions and how companies are navigating this ever-changing ecosystem, watch the full episode today!