Challenges for Counter-Proliferation Finance and Sanctions Control in Banking

In light of the increasingly complex sanctions landscape, measures are required to strengthen the financial system against proliferation finance (PF) and sanctions evasion activity. While governments have a role to play in setting the regulatory and legal landscape to fight PF and preserve the integrity of the global financial system, they rely on the global cooperation of the financial sector to achieve effective counter-proliferation finance (CPF) and sanctions implementation. This report provides support to the financial sector by identifying the challenges that financial institutions (FIs) face when implementing CPF and sanctions controls and giving recommendations for tackling such challenges. Informed by the authors’ interviews with experts in the field of CPF and sanctions, the four key challenges to effective CPF and sanctions implementation are:

1. A disconnect between regulatory expectations and practical implementation.
2. Limited data quality and integrity.
3. Limited subject matter expertise.
4. Disparity across the banking sector with regard to PF and sanctions risk assessments.