The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

As malign actors develop more sophisticated strategies to evade restrictions, the future success of sanctions depends on innovation, collaboration, and transparency. 

A recent Clue Software webinar explored these pressing issues, with experts from the Foreign, Commonwealth & Development Office, National Economic Crime Centre, National Crime Agency, Lloyds Banking Group, and UK Finance offering valuable insights on the opportunities and challenges facing sanctions regimes today. 

Challenges in sanctions enforcement 

Sanctions evasion and circumvention 

A key challenge is the growing sophistication with which bad actors evade sanctions. Countries like increasingly utilise shell companies, complex ownership structures, and cryptocurrencies to bypass restrictions. These techniques make it increasingly difficult to track beneficial ownership and enforce sanctions effectively. 

Experts highlighted the need to tighten oversight where evasion is most prevalent. For instance, the use of "shadow fleets" to evade the oil price cap was flagged as a prime example of how sanctions are being undermined. 

Coordinating a global response 

Effective sanctions enforcement requires seamless coordination between government agencies, international allies, and the private sector. However, ensuring consistent information-sharing and aligning policies across borders remains a significant obstacle. Coordination is essential, as sanctions span multiple sectors and jurisdictions. 

The role of professional enablers 

Another issue is the role of trusted intermediaries—property, public relations, or other higher-risk professional services—who may facilitate sanctions evasion through negligence or complicity. These "professional enablers" play a key role in shielding bad actors, often making it difficult to trace illicit activity or laundered funds. 

Opportunities for improvement 

Leveraging technology and data analytics 

Advances in technology, particularly artificial intelligence (AI) and blockchain, offer new opportunities to enhance sanctions screening and enforcement. AI can improve operational efficiency, reducing false positives and backlogs, while blockchain provides greater transparency and traceability of transactions. 

Strengthening public-private partnerships 

Collaboration between the public and private sectors is vital for closing vulnerabilities and improving sanctions enforcement. Sharing intelligence and developing future sanctions policies through strong partnerships can bolster the overall effectiveness of sanctions regimes. 

Enhancing corporate transparency 

Improving transparency around beneficial ownership is critical to preventing sanctions evasion. Recent efforts, such as the reform of Companies House, including the introduction of ID verification and stronger enforcement powers, are key steps toward limiting the misuse of corporate vehicles for illicit purposes.

Conclusion 

Sanctions are a powerful mechanism for economic deterrence, but as evasion tactics become more advanced, the need for innovation, cooperation, and transparency has never been greater. By leveraging emerging technologies and fostering strong public-private partnerships, sanctions can be more effectively enforced, ensuring they target the right actors without causing unintended harm. 

For more insight into these topics, rewatch the webinar or connect with the experts at Clue Software to explore how our solutions can support Economic Deterrence.