The majority of financial services organisations in Australia will need to implement better procedures to comply with global economic and trade sanctions or risk suffering harsh penalties, according to Deloitte global managing partner of forensic and dispute services Tim Phillips.
“In Australia for example you’ve got the top four banks paying a lot of attention to this but you’ve got a bunch of other very significant financial institutions who have historically said ‘what’s this thing called sanctions?’,” Phillips said.
“Definitely that awareness and concern quickly falls off as you move beyond depository institutions towards investment banking and on to asset management,” Deloitte lead partner Asia Pacific sanctions advisory practice Graham Dillon said.
Sanctions are restrictions regarding economic activity or interaction with certain organisations and/or countries.
According to a Deloitte study there are 500 statutes in force with 1500 specific conditions contained within them that relate to financial services.
If an organisation finds itself in breach of these sanctions it can suffer not only reputational damage but also hefty penalties and criminal prosecution in regard to US sanctions.
“The Office of Foreign Assets Controls (OFAC) can fine you US$250,000 per violation or twice the amount of the transaction. They have the ability to fine up to US$1 million when wilful intent is proven and also criminal prosecution can result in jail sentences of up to 20 years,” Dillion said.
The Deloitte study sought responses from 388 financial services executives worldwide.
The research showed 46 per cent of participants thought this area of compliance was a growing concern, but in contrast 30 per cent expressed no concern at all.
The study also revealed 63 per cent of executives felt this compliance had consumed more time, money and resources over the past three years.
