Global Sanctions and Their Impact on Investment Compliance

Published on October 13, 2025 by Sajid Kachhi

Have you ever paused to consider how the geopolitical landscape directly shapes the daily work of investment compliance officers? The reality today is stark: global sanctions are not just political statements—they are active instruments that dictate portfolio decisions, asset freezes and compliance protocols across the globe.

What are global sanctions?

Sanctions are restrictions imposed by governments or international bodies such as the United Nations (UN), European Union (EU) or the US to further political, security or humanitarian goals. They can take many forms:

• Comprehensive bans on a country’s entire financial system.

• Targeted restrictions on individuals, companies or entire industries.

• Financial controls limiting access to capital markets and banking services.

For compliance professionals, this means an unambiguous imperative: know every party involved and ensure your investment activities avoid contact with sanctioned entities.

Why sanctions matter for investment compliance teams

Sanctions compliance affects every aspect of investment operations:

• Screening of portfolio: Every effort should be made to continuously cross-reference issuers and funds against lists such as the US Office of Foreign Asset Control’s, Specially Designated Nationals list or the EU’s Consolidated List.

• Controls on trading: Real-time blocking of transactions that involve securities that are restricted.

• Cross-border conflicts: Monitoring conflicts that arise from cross-borders. What is permissible in one jurisdiction might be entirely prohibited in another jurisdiction.

• Managing reputation: Legal investments can quickly become reputational risks if they are linked to parties or countries that are sanctioned.

Real-life enforcement to learn from

Regulators worldwide have shown limited tolerance for weak sanctions controls. Here are a couple of real-world examples:

• British American Tobacco (BAT, 2023): OFAC fined BAT over USD635m, the largest-ever sanction penalty, for transactions linked to North Korea.

• Clearstream Banking (2022): The SEC imposed a USD152m penalty for holding Iranian securities, despite US sanctions.

These examples give us a clear vital lesson: sanctions compliance depends on robust systems, accurate data and vigilant controls. These incidents also illustrate the critical importance of sanctions management and required controls.

The challenges ahead: Why compliance is harder than ever

• Rules and regulations that change overnight: Sanctions lists update frequently. Static, manual systems quickly become outdated and risky.

• Complex corporate structures: Sanctioned companies often hide their ownership through other subsidiaries or offshore entities, in turn challenging compliance efforts of organisations.

• Emerging risks in decentralised finance and crypto: Digital assets now provide new paths for sanctions evasion, giving rise to greater regulatory scrutiny and robust system requirements.

Best practices for investment compliance

To keep pace with this dynamic environment, compliance units need to undertake the following:

• Automation of screening: Systems must have checks for sanctions embedded within onboarding and Order Management Systems (OMS) to avoid gaps.

• Continuous staff training: Regular training ensures that the teams stay current, as sanctions regimes evolve rapidly.

• Global coordination: Compliance across jurisdictions need to be coordinated to resolve conflicts among jurisdictions and other regulatory bodies.

• Engage subject-matter experts (SMEs): Proactive and deeper work integration is required between departments such as legal, compliance and technology to make maximum use of SMEs specialised in sanctions compliance.

Three immediate actions for compliance officers

• Frequent portfolio health checks: Cross-verification of client holdings against the most recent OFAC, EU and UN sanctions lists would reduce errors and fines to regulators.

• Review of escalation procedures: Streamline processes and standard operating procedures, so that potential sanctions risks reach the compliance leadership quickly and gaps can be plugged immediately.

• Assessment of screening vendors: Ensure third-party data providers update the sanctions information in real time to minimise risk and maintain market reputation.

Key takeaways

• Sanctions compliance is a legal and reputational requirement.

• Real-world cases such as BAT and Clearstream show that penalties can be substantial if compliance is not adhered to.

• Leveraging SMEs, technology and expert training makes compliance systems more robust and practical.

Why sanctions compliance is more than avoiding penalties

Sanctions compliance is not just about avoiding fines. It is about maintaining investor trust and safeguarding the integrity and reputation of global financial markets. Firms that adopt strong, tech-forward compliance models will be best positioned to withstand future disruptions and avoid regulatory fines. This leads to setting up of standards and best practices for the industry.

How Acuity Knowledge Partners can help

At Acuity, we help investment firms face the complex world of global sanctions with confidence. From our in-house expert SMEs to automated portfolio screening and from robust trade surveillance tools to regulatory advisory, our solutions help and support compliance teams to stay ahead of the evolving risks and protect investor trust.

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