How to prevent financial sanctions

Financial sanctions can be very damaging for any firm in the financial or banking sector. In the UK, the Office for Financial Sanctions Implementation (OFSI) ensures that these sanctions regulations are enforced. Knowing how to prevent these financial sanctions is extremely beneficial to all firms looking to run a profitable and legal business.

1. Know the law

The first way to prevent violating financial sanctions is to understand how they work and how they affect your business. The OFSI frequently updates their website with news and articles about the latest financial sanctions put in place. Keeping up to date with these developments ensures that your firm can put into place relevant policies and changes to avoid any accidental financial sanctions. Checking the OFSI on a daily basis eliminates any doubt over the changing financial landscape and the sanctions that are put in place to stop money laundering and terrorism.

2. Ensure transparency

It is one thing to know the law behind financial sanctions, but it is another to know that your business is operating with full transparency. Often, businesses receive financial sanctions due to an accidental error, or non-disclosure of information to the relevant stakeholders. For a business to prevent financial sanctions, transparency needs to be embedded in the company culture. Effective governance will ensure that all employees are aware of the importance of financial crime compliance. Rules and procedures need to be implemented to conduct financial sanctions checks, to keep the business operating effectively.

3. Educate employees

For any financial crime compliance strategy to work, employees must understand how financial crime is committed, and how to safeguard the business against it. While the OFSI provides very useful information, many tools and techniques can only be understood with the help of a professional instructor. Financial Crime Compliance Training is a great way of educating key employees at any level, to provide immense value and security to any business in the financial sector. There are many forms of financial crime, including cybercrime, fraud and money laundering, all of which can have a huge impact on a financial business. Training courses help prevent financial sanctions, as well as to understand how to eliminate financial crime from a business.

4. Update recruitment processes

Recruitment is an important part of any business, but in the financial sector, it proves a much more important task to vet any potential employees for financial crime compliance. Recruitment processes must be thorough enough to understand the full background to the employee, to manage the risk of financial crime being committed. Even the smallest doubt in a recruiter’s mind must be acted upon. This ensures that no financial sanctions are violated due a new employee not being suitable for the role, or having the type of personality that may be susceptible to bribery or coercion.

5. Develop internal audit and financial compliance processes

For a business that is serious about financial sanctions compliance, internal audit processes should be developed to identify and rectify any potential risks. All departments should be frequently reviewed, with a clear work log available so that a financial compliance team can analyse and flag any mistakes or errors that could cause a problem.

Although it can take time to create efficient processes, auditing is one of the most effective ways of ensuring a business prevents all UK financial transactions.

Overall, financial crime compliance is a very serious issue. While it can seem daunting, following these 5 tips will ensure a business avoids any and all financial sanctions.