How we are keeping abreast of changes in the world of economic sanctions

Amir Fadavi
7 minutes
Finance
How we are keeping abreast of changes in the world of economic sanctions

Most of us have probably heard the phrase “economic sanctions”. You may have heard it discussed in the news or perhaps when dealing with your bank or financial institution. Economic sanctions have been around for decades, and as more and more countries use them, their importance has increased. In particular, for those who conduct business internationally. 

As a global company licensed in several jurisdictions around the world, Airwallex must comply with different sets of economic sanctions, while staying committed to facilitating the global business of our clients. 

But what are economic sanctions? And why do they matter? 

What are economic sanctions? 

By definition, economic sanctions are a set of restrictive commercial and financial measures used by governments or international organisations (like the United Nations), to bring about changes in the behaviour of another government, entity, or person. 

Economic sanctions have become one of the favourite tools in a country’s foreign policy arsenal, and are used to apply pressure and drive desired changes in behaviour (of those against whom the sanctions are imposed). These restrictive measures can be very specific or very broad in nature. As an example, a specific economic sanction might block (freeze) all the assets of an organisation. While a broad restriction could be a complete ban on transactions related to a single country.

Why do economic sanctions matter?  

If that is confusing, you are not alone. While economic sanctions can be complex, they are also powerful tools with considerable business impacts. If a business chooses to disregard economic sanctions, it may be blacklisted or fined by the relevant authorities. This doesn’t just impact the business alone, but also its external stakeholders such as partners. International businesses need to respect not only the sanctions imposed by their operational location, but also those of their clients and the subsequent financial institutions they work with. 

What are ways to decrease the chance of sanctions violations as an international business? 

International businesses can take few steps to ensure they are not breaching economic sanctions: 

Knowing the customer - Many governments have put together lists of entities and individuals with whom one cannot deal with. By knowing who the customer is, an international business can check if doing business with it is prohibited or not.

Staying informed about changes - Economic sanctions are fast changing and this should be taken into account by businesses. Something that might be permissible today, may be prohibited tomorrow. Therefore, it is important to keep abreast of developments in sanctions. 

Asking experts when in doubt - Economic sanctions are complex sets of rules and it’s easy to get them wrong. It is always helpful for a business to consult a subject matter expert when in doubt.  

How does Airwallex manage economic sanctions globally?

Our global legal and compliance team is dedicated to upholding regulations across all the regions we operate in. This includes economic sanctions. Such a complicated task is made possible thanks to a number of elements embedded in our Global Sanction Compliance Program. 

Airwallex management support - Airwallex is committed to fostering a culture of compliance throughout all areas of the business. As a global financial technology company, Airwallex’s compliance to regulations and contractual obligations is critical to the success of our business. Operating in an ethical and compliant manner is a core value and the compliance program is given enough resources to guide Airwallex in its commitment to comply.  

Global competence mixed with subject matter expertise - Airwallex has an established Sanctions Compliance Program that is led by a dedicated Global Sanctions Compliance Officer. This is supported by a group of experts in different jurisdictions where Airwallex conducts business, ensuring we have the right local knowledge and expertise. 

Data-driven decision making approach - Unlike some conventional financial institutions, Airwallex uses data to make informed decisions about sanctions and restrictions. We manage the risk we face by looking at the data gathered through the course of business and we spot the risker areas. We also use our in-house technologies, as well as tools provided by our partners to ensure our clients do not use Airwallex for unauthorised activities.  

Sharing the knowledge - A sanctions compliance program is only as strong as the shared-knowledge and team behind it. Airwallex’s compliance team trains employees on sanctions and makes them aware of our Sanctions Compliance Program. Within the compliance and legal teams, we ensure that all the recent developments are shared and that everyone is aware of the fast-changing regulator scene.  

Not a check-in-the-box approach - At Airwallex, we work with clients of different sizes from various industries that are from different jurisdictions. There is no one-size-fits-all solution that covers all of our customers. We understand the regulatory requirements and expectations with the help of our global team of experts and then make sure we understand the specific needs of each business we work with. This way, we can provide the best possible solution relevant to them and the jurisdictions where they operate.

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Amir Fadavi
Sanctions Compliance Specialist at Airwallex

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