Politically Exposed PersonsSanctions

Sanctions Policy in 2018

By August 15, 2018 September 16th, 2020 No Comments

When in doubt, apply sanctions – one week of sanctions policy in 2018

Sanctions grabbed a lot of headlines last week. Here is a summary of the key events that kept twitter feeds alight:

  • The US announced that it would be placing sanctions on Russia for the attempted poisoning of Sergei and Yulia Skripal. These sanctions will target the electronics sector but are expected to be only the beginning. Further sanctions will follow if Russia refuses UN chemical weapons inspectors into their weapons facilities.
  • The Turkish Lira plummeted to historic lows last week in response to new sanctions placed on Turkey by Trump. They aim to punish the country for imprisoning an American pastor.
  • A report emerged detailing a breach by South Korea of UN sanctions on North Korea who allegedly imported embargoed coal from the country late last year.
  • The bizarre spat between Saudi Arabia and Canada continued with Saudi Arabia effectively banning the purchase on all Canadian goods and assets by its countrymen.   

One consistent factor throughout all of these stories is the knee-jerk reaction by policymakers to use sanctions to resolve seemingly any foreign policy issue. This slapdash approach to the use of sanctions will have to be closely monitored by companies. New or extended sanctions by any of the above countries are likely, compliance departments will need to ensure they can respond to changes with very little warning.

Not all that glitters is gold – calling time on “Golden Visas”

Golden Visa schemes allow wealthy individuals to receive citizenship from a country in exchange for investment. They are popular with individuals who want the flexibility afforded by an extra passport, especially if that passport provides visa-free access to a developed economic area. The EU is one such area which this week took aim at the “Golden Visa” schemes in eight European countries. The eight countries, which include Malta, are failing to meet the bloc’s due diligence requirements and have become an unignorable strategic weakness in the EU’s effort to stop dirty Russian money entering the Union.

The issue of Golden Visas in Europe has come to a head for a number of reasons. Firstly, the recent money laundering scandals involving Latvia, Estonia and Malta have all shown just how easy it is for Russian money to enter Europe. On top of this, a report by Transparency International and the OCCRP earlier this year exposed a series of examples of how politicians use Golden Visas to facilitate corruption. Lastly, the murder of journalist Daphne Caruana Galizia occurred while she was investigating among other things, Malta’s Golden Visa scheme. The EU is due to release its findings into the eight countries this fall, expect it to come with a lot of recommendations.

The FCA’s sandbox goes global

Last week, the FCA announced the launch of the Global Financial Innovation Network, or GFIN for short. GFIN is the product of the regulator’s aim to take the UK’s national, and very popular sandbox, to the world’s stage. It will offer innovative firms a “more efficient way” to interact with regulators and to create a platform for the exchange of experiences and ideas. This “global sandbox” will include the Monetary Authority of Singapore (MAS), the Hong Kong Monetary Authority (HKMA) and the Bureau of Consumer Financial Protection (BCFP) in the US, as well as seven other regulators from around the world. It will be steered by one member, but this will be periodically rotated.

The idea of a “global sandbox” has been talked about for some time. Back in April, it was first suggested as a way of allowing companies and regulators to better understand each other.  It will also encourage companies to bake in regulatory protections from the outset of developing their products, a trend we see more and more in new regulations. Once the details of this initiative have been ironed out by the consultation published alongside the announcement, we will see which of the many regulatory hurdles they will choose to focus on first. It is likely that financial crime will make the shortlist.  


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