Improving the effectiveness of targeted financial sanctions control in banks

Abstract

Targeted financial sanctions are lists of individuals or entities designated for sanctions under the legislation of the Republic of Azerbaijan and the resolutions of the United Nations Security Council. These sanctions aim to prevent the financing of terrorism and weapons of mass destruction. The measures require financial institutions to immediately freeze assets and accounts, as well as terminate business relationships with individuals or entities identified on these sanction lists. Financial institutions must promptly identify such individuals within their customer base and take necessary actions without delay. Failure to effectively and timely investigate or identify customers and transactions poses significant risks to institutions, including sanctions, reputational damage, and other operational risks, highlighting the importance of this issue. The effective implementation of controls is a fundamental principle of the risk-based approach and a critical requirement for financial institutions.