BOV warns businesses: sanctions compliance needs human judgment, not just software
Bank of Valletta CEO Kenneth Farrugia tells businesses that technology alone cannot manage sanctions risk as the bank hosts a compliance webinar.
Businesses need to understand the ownership, purpose and destination behind transactions rather than relying solely on automated screening, Bank of Valletta has warned during a webinar on international sanctions.
Chief executive Kenneth Farrugia said sanctions can affect routine commercial activity, including payments, supplier relationships, imports, exports and investments.
That can require businesses to establish who ultimately owns or controls a counterparty, where goods are going, who will use them and whether intermediaries are involved.
“Compliance systems and screening tools play an important role, but technology alone is not enough,” Farrugia said.
The bank’s account of the webinar describes a practical discussion led by Farrugia and Group Chief Anti-Financial Crime Officer and Money Laundering Reporting Officer Ryan Caruana.
Caruana encouraged organisations to monitor relevant developments from the EU, United Nations, Malta’s Sanctions Monitoring Board and other international authorities, including the US and UK sanctions offices.
The applicable legal obligations depend on the sanctions measures, jurisdictions and activities involved. Monitoring foreign regimes should therefore form part of an informed assessment rather than an assumption that every overseas restriction automatically applies as Maltese law.
Caruana also highlighted customer and payment screening, escalation procedures, risk assessments, staff training and prompt updates to policies and systems.
The discussion follows the Sanctions Monitoring Board’s publication of Article 32 compliance guidance, addressing governance, screening, due diligence, reporting and record-keeping for entities within its scope.
For businesses, the practical challenge is maintaining a process that connects those controls. A screening result needs to be assessed against ownership information, transaction details and the relevant legal requirements, with concerns escalated to people able to make and document decisions.