Cryptocurrencies Raises Fears Among Compliance Pros: Survey

Cryptocurrencies and other emerging financial technologies raise concerns with sanctions and compliance professionals, the results of a new survey by the International Compliance Association suggest.

Almost half (46 percent) of respondents believe greater training and education is needed around crypto/digital currencies and emerging financial technologies in relation to sanctions compliance.

With the rapid rise in crypto and digital currencies and emerging financial technologies, naturally, regulations continue to evolve,” ICA course director and global lead for sanctions compliance Ross Savage said. “It means that organizations operating across multiple jurisdictions constantly need to review and assess the impact of new legislation and regulation. Therefore, we were keen to identify the main sanctions risk management challenges faced by business leaders and organizations operating around the world.”

Respondents came from industries including banking, accounting, asset management, insurance, payment services and betting and gaming.  They highlighted the impact of digital currencies and emerging financial technologies as an area of concern, but wider challenges related to training were also identified. For example, 70 percent have less than ten hours of training on managing sanctions risk over the past 12 months while 10 percent have no training at all. Of those who said no sanctions-specific training had been delivered, 71 percent work in firms with at least 100 employees.

Reputation damage was the most common concern in terms of sanctions risk and was cited by 42 percent. Next in line were concerns about substantial fines (27 percent) and the inability to conduct business in specific geographical regions (13 percent).   

Sanctions play key roles in the international battle against financial crime, proliferation, terrorism, and human rights abuses. Those who manage those risks need the right combination of knowledge, capabilities, and behaviours to manage it effectively. The survey hints at the need for greater awareness of the impact and real-world consequences of financial crime.

On the positive side, 68 percent of respondents said their business had undertaken a sanctions risk assessment in the past 12 months while  18 percent had not. One-third (32.9 percent) of firms have not assessed sanctions risk across their supply chain in the past 12 months, and one out of four were unsure.

Further room for improvement is seen in the fact more than one-quarter of firms said they do not have a dedicated person assigned to sanctions risk, and two-thirds of these are firms with at least 100 employees.

The biggest challenge in addressing sanctions risk is the issue’s increasing complexity, a fact mentioned by 39 percent. The second most common reason is the lack of staff awareness of the related risks (26 percent).

Staff education is not the only area of improvement. While 85.5 percent said they use screening software to help manage sanctions risk, 64 percent said they have problems with false positives.

“With 55 percent of respondents expecting to make changes to their sanctions risk programme in the next 12 months (20 percent major, 34 percent minor), this offers an opportunity to broaden training programmes to ensure staff are fully equipped to understand the changing nature of sanctions risk and control and the full consequences of non-compliance,” Savage said.

“Putting sanctions into perspective, framework controls are now a matter for the whole senior management team and board members to ensure compliance with regulations and ultimately protect the firm across increasingly diverse supply chains, against the backdrop of an ever-changing landscape. At  ICA, we are committed to helping our members and learners navigate the complex world of sanctions across multiple jurisdictions with our range of courses, qualifications, CPD and network support, aiming to go beyond training to affect behavioural change.”


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