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Sanctions compliance in 2025 isn’t getting any easier. With fast-moving geopolitical tensions, regulators expanding their reach, and enforcement actions at record highs, corporates can no longer afford a “tick-box” approach.

Yet, many companies are still falling into the same traps. These mistakes don’t just risk fines; they damage reputations, disrupt supply chains, and in some cases, shut down entire business lines.

Here’s what to watch out for and how to get it right:

1️⃣ Relying Only on Screening Software

The trap: Many firms assume that installing a sanctions screening tool is “job done.” But software isn’t foolproof. One global company discovered too late that its system flagged “Alexander Petrov” but missed “Aleksandr Petrof”, a sanctioned individual using minor variations in spelling.

Why it matters: Regulators increasingly expect effective screening, not just the existence of a tool. Missing one sanctioned entity can lead to multi-million-dollar penalties.

Fix it:

• Regularly update sanction lists (daily if possible).

• Use fuzzy matching and transliteration logic for name variations.

• Add human review for potential matches, especially in high-value or high-risk transactions.

• Test your system quarterly with “red team” scenarios to see if it can catch evasions.

2️⃣ Ignoring Risk Updates

The trap: A European manufacturer was caught out when a long-standing customer in Central Asia suddenly became high-risk after new sanctions were imposed. Their risk assessment was three years old outdated and irrelevant to today’s reality.

Why it matters: Sanctions change overnight. What was low-risk yesterday can be prohibited tomorrow. Regulators expect corporates to demonstrate that they continuously reassess exposure.

Fix it:

• Treat risk assessments as living documents, not annual box-ticking exercises.

• Update them whenever a new sanctions regime is issued.

• Consider real-time risk monitoring tools that track geopolitical developments.

• Ensure the board and senior management are briefed on new risks, not just compliance teams.

3️⃣ Overlooking Third-Party Exposure

The trap: A global logistics company faced an OFAC penalty after its local subcontractor shipped goods into a sanctioned country. The corporate itself never dealt directly with the territory but regulators still held them responsible.

Why it matters: Supply chains and third parties are the number one blind spot in corporate sanctions programs. Indirect exposure through distributors, freight forwarders, or agents can create liability.

Fix it:

• Screen not just customers, but suppliers, intermediaries, and agents.

• Embed sanctions compliance clauses in contracts (with audit rights).

• Map out your supply chain dependencies to identify choke points.

• Prioritise ongoing monitoring of high-risk partners, not just onboarding checks.

4️⃣ Skipping Practical Employee Training

The trap: Sales teams in a multinational unknowingly processed orders into Crimea because they weren’t briefed on the region’s sanctions. The compliance team had policies but policies don’t help if employees don’t understand them.

Why it matters: Most sanctions breaches are operational failures, not policy gaps. If staff on the ground aren’t trained, controls break. Regulators increasingly ask for evidence of targeted, role-based training.

Fix it:

• Deliver role-specific training (sales, procurement, finance).

• Use scenario-based exercises relevant to daily business (e.g., “Would you process this shipment?”).

• Refresh training quarterly or whenever major sanctions change.

• Track completion rates and test results to evidence compliance during audits.

5️⃣ Poor Documentation

The trap: During an FCA review, a UK company couldn’t show evidence of how it cleared a high-risk client. The onboarding had been done “verbally” with no records. The result? A compliance remediation order and reputational damage.

Why it matters: Regulators operate on the principle of “if it’s not documented, it didn’t happen.” Even if your decision was sound, without proof you’re exposed.

Fix it:

• Maintain digital audit trails for all sanctions checks, approvals, and escalations.

• Store evidence of due diligence in centralised systems, not individual inboxes.

• Implement clear record retention policies (e.g., five to seven years).

• Review your audit-readiness annually to avoid scrambling under pressure.

✅ Bottom Line

Sanctions compliance in 2025 is no longer about minimum effort, it’s about resilience. That means:

✔ Smart technology with human oversight
✔ Up-to-date and dynamic risk assessments
✔ Vigilant monitoring of third parties
✔ Practical, role-based employee training
✔ Meticulous documentation and audit trails

Get it right and you safeguard your company, your reputation, and your bottom line.

💡 Need expert guidance on sanctions compliance?
At ComplySphere Advisory, we help corporates navigate multi-jurisdictional sanctions risk with practical, actionable solutions—designed to keep your business safe, compliant, and operational.

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