On December 22, 2023, the Office of Foreign Assets Control (OFAC) published an advisory to guide foreign financial institutions on the amendments to Executive Order 14024, including practical guidance on how to identify sanctions risks and implement corresponding controls. The amendments to E.O. 14024 allows OFAC to sanction foreign financial institutions that have conducted a significant transaction for any persons, and provided any services including sale, supply or transfer to Russian federation.

To mitigate sanctions risk, foreign financial institutions should take steps to identify and minimize their exposure to activity involving Russia’s military-industrial base and those that support it. These steps are in addition to baseline customer due diligence (CDD) procedures and other anti-money laundering controls.

The Sanctions Risk Mitigation and Identification Measures are:-

1- Reviewing an institution’s customer base to determine exposure to any customers involved in the specified sectors of the Russian economy, and customers involved in the sale, supply, or transfer of the specified items to Russia
2- Communicating compliance expectations to customers
3- Sending questionnaires to customers known to deal in or export specified items to better
understand their counterparties
4- Taking appropriate mitigation measures for any customers or counterparties engaged in high-risk activity
5- Obtaining attestations from customers that they do not operate in the specified sectors
6- Incorporating risks related to Russia’s military-industrial base into sanctions risk assessments
and customer risk rating criteria
7- Implementing enhanced trade finance controls related to the specified items, including
monitoring information collected as part of documentary trade
8- Using open-source information and past transactional activity to inform due diligence and to
conduct proactive investigations into possible sanctions and export control evasion