The Bailiwick’s compliance with financial sanctions

11th May 2022

The Commission has today issued its report on the thematic review of its licensees’ effectiveness in monitoring and compliance with targeted financial sanctions. The results showed that the sanctions screening systems that firms use are effective. A copy of the thematic review can be found on the Financial Crime Division's Thematic Reviews page.

The Commission undertook this work in 2021 having recognised the growing importance and complexity of sanctions compliance.  The Russo-Ukrainian war has only served to highlight the importance of robust and easily useable controls in this area. The Commission’s field work predates the conflict and thus has not assessed the hard work firms have put in to implementing sanctions brought into effect as a consequence of the Russian invasion of Ukraine.

Our effectiveness testing was extensive. Those subject to the testing were responsible for over 260,000 business relationships with the banks tested responsible for 99.8% of inward transactions and 99.6% of outward transactions in and out of the Bailiwick during 2021. The results showed that only a small minority of firms were in need of material improvement.  These few firms were made subject to risk mitigation programmes set by the Commission.

We noted many examples of good practice and it was encouraging to note the strong performance by banks in the effectiveness testing, particularly the main clearers. Nevertheless, the Commission is aware of previous failures with automated screening systems - firms need to continue to ensure that they consider and document their sanctions risks, the screening process, as well as testing the effectiveness of the sanctions screening systems employed.

All firms are obligated to manage sanctions risk and we hope that this report will also be of interest to firms in every sector as they are all under the same obligations in respect of sanctions screening.

The results from the thematic review reflect the Bailiwick’s commitment to preventing the abuse of its financial services sector and to meeting established international standards for preventing financial crime.

We will be holding an industry event in June to run through the findings from the thematic review in more detail. Invitations will be sent out shortly.