Sanctions, the Basics

The anti-money laundering compliance header is quite vast. It is not always easy to navigate the various areas and sections. Interestingly enough, the subheaders can often be as expansive. Sanctions in the last few years have gained interest. In my opinion, ACAMS did have a role to play by spearheading platforms solely dedicated to understanding sanctions. 

Definition of Sanction

The dictionary definition of sanction is a punitive or coercive measure or action that results from failure to comply with a law, rule, or order a sanction for contempt. The confusing aspect for me is that the word refers to permission or restriction. A sentence stating that a country is sanctioned, depending on the context, could mean that the country should not be engaged or the country is approved.

Professionally, most often, sanction refers to the former. It refers to the list of countries, companies, persons, or other restrictions are levied against them.

The Types and Uses of Sanctions

Several types of sanctions exist, which allow for various uses of sanctions. Some types include economic, financial, humanitarian, diplomatic and more.

Sanctions are utilised by authorities multilaterally and unilaterally. The United Nations (UN) is the best example of a multilateral action for issuing sanctions. Unilateral action is issued by the United States, Canada, Australia or the United Kingdom, of which the US has published the most unilateral sanctions.

Recently Notable Sanctions

The most sanctioned countries are Iran, Syria, North Korea, Venezuela, Myanmar, and Cuba, in that order. Russia was second on the list until recent events between Russia and Ukraine. It is now the most sanctioned country.

An anti-money laundering professional, whether in charge of the whole program or a portion of the program, should understand sanctions. Understand the basics and monitor the trends for your benefit. 

Check out a previous article discussing sanction screening.