Banks Suffer Sanctions Headache Amid Ukraine CrisisMaud van Gaal
The growing prevalence of sanctions in foreign policy is forcing banks to devote more resources to ensuring compliance, a law firm said.
“The proliferation of international sanctions causes a significant regulatory headache for banks,” Pinsent Masons LLP said in a statement today.
The firm cited the U.K. as an example of the steep rise in the use of trade restrictions in international disputes. As of July 28, the U.K. had sanctions in place against 2,401 individuals and organizations, up 69 percent from 1,424 at the end of 2004, according to the London-based firm.
That includes 100 names added to the U.K. blacklist this year, mainly in connection with the Ukraine crisis. The U.S. and European Union this week expanded measures against Russia, for the first time targeting entire industries, specifically energy, banking and defense.
Western countries hardened their stance against Russia after a Malaysia Air jetliner crashed in a rebel-held area of eastern Ukraine killing all 298 people aboard. U.S. intelligence and military officials say it was the apparent target of a Russia-supplied missile. Rebels deny they were involved.
Each addition to the lists is “just the tip of the iceberg,” Tom Stocker, a partner at Pinsent Masons, said in the statement. “Individual identity checks are just the start of the process, and banks have to delve through company records, past and present, to establish the true identity of a company’s owner.”
The record fine imposed on BNP Paribas SA earlier this month shows the risks of not complying. The French bank was ordered to pay $8.97 billion for processing payments involving Iran, Sudan and other countries blacklisted by the U.S.