Anti-Money Laundering Seminar

PRACTICAL EXERCISE 4

Sanctions Risk Management

You have recently received a request from your US Correspondent asking you to completed a declaration. The
completion of this form is a requirement for your continued relationship with them. The declaration asks whether your
Bank has:

 Maintained a Correspondent Account, in any currency, with an Iranian linked Financial Institution designed
under OFAC
 Processes any funds transfers related to an entity listed under the USA’s Iranian Financial Sanctions
Regulations, within the last 90 days.
 Processes any transfers in any currency related to an OFAC designated person or entity.

Although your Bank is able to provide the confirmation required under the first two questions, a response to the third
question is more problematic. Payments to certain Iranian listed entities (not designed under International Sanctions)
have been and continue to be undertaken in various currencies including Euros. You where under the impression that
this was not an issue as it did not breach any local, EU or International sanctions measures nor was it undertaken in
US$. You quickly realise that your US Correspondent has been asked to issue the declaration under the USA’s
Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA).

You already employ OFAC filtering software as part of your sanctions screening arrangements, and have a process in
place for dealing with any potential matches. However, in view of the USA’s aggressive enforcement of its sanctions
regime, your Chief Executive has asked you to review your Bank’s current policy in relation to US Sanctions and identify
any gaps or additional risks.

It is hoped that by highlighting and addressing these risks without delay, your US Correspondent will not be obliged to
impose any restrictions on your continued business with them.

PRACTICAL EXERCISE

Working in your syndicate groups, will you please discuss and highlight the following, using the scenario outlined about:

1 How would you assess your Bank’s current risk exposure to US sanctions. What specific factors would you
need to consider?

2 Should your assessment be based purely on transactional behaviour and if not, what other factors are involved?

3 How frequently should your sanctions policy be reviewed and who should be the Policy Owner?