Institutions should begin by treating proliferation financing as a distinct risk in their Business Risk Assessments (BRAs), much like they do terror financing, political exposure, and other risk. Indeed, while many indicators might be similar, it is key to also place them within the context of proliferation financing.

This means monitoring financial activity that relates to jurisdictions and sectors of concern, the involvement of dual-use goods — on top of existing monitoring of diversion risk — and overly complex ownership structures. Onboarding processes must go deeper than surface-level checks. Understanding where client funds come from, how wealth is generated, whether declared business activities align with financial behaviour, and how proliferation risk manifests in different industries where such issues are more likely to appear, particularly logistics, trade finance, shipping, and chemicals, is essential.

Risk assessments should be tailored and multifactorial. A single red flag does not always signal a high-risk client, but the accumulation of minor concerns might.

Context is key and documentation of every decision strengthens internal controls while mitigating the risk of sanctions by the regulator due to a lack of well-documented justification of decision-making.

Why Guernsey Firms Cannot Afford Complacency

While Guernsey is not considered a high-risk jurisdiction for proliferation financing, indirect exposure remains a concern. Global fund flows, international client structures, and opaque supply chains can all serve as unintended conduits for this type of risk.

As mentioned above, boards must be informed, risk frameworks updated, and documentation consistent and defendable. Most importantly, managing proliferation financing risk must go beyond checklist compliance. Regulators expect firms to demonstrate reasonable, well-considered decision-making when it comes to assessing and mitigating exposure.

Final Thoughts

Proliferation financing is no longer a niche compliance concern but a serious issue that reflects the complexity of global financial crime. In 2025, Guernsey firms have a strategic opportunity to get ahead of the curve, not by starting from scratch, but by refining and reinforcing the systems already in place.

At Sqope Intelligence, we believe in clarity where it matters most. Our enhanced due diligence process integrates key proliferation financing indicators to help firms detect both obvious and more obscure risks alongside potential mitigating factors so they can be addressed before they escalate. Because in today’s regulatory landscape, anticipating risk is no longer optional: It’s the standard for resilient and responsible compliance.

Represented by Roi Lavi, Managing Director for Europe, and Miriam Goldman, group COO, the two had an insightful three days with peers from various industries. In addition to Roi taking the stage for an interesting panel discussion on ESG compliance in the life sciences, they learned about some of the ongoing and new challenges facing those in the compliance space, from the FCPA pause to enforcement of export controls.

A big thank you to the organizers and fellow speakers for fostering engaging discussions on key topics. We’re already looking forward to ECP DACH 2026!

This act has, since 1977, criminalized US individuals and entities engaging in bribery of officials to obtain or retain business, while also mandating transparent accounting provisions on publicly traded companies to prevent the concealment of such payments. Referred to by a prominent NGO as the “crown jewel in the US’s fight against global corruption”, the executive order offers a contrasting account of the FCPA, describing it as barring citizens and businesses from engaging in “routine business practices in other nations”. This forms part of his broader agenda to prioritize American economic interests, in this case by reducing regulatory constraints on US businesses operating globally.

During the 180-day suspension, US Attorney General Pam Bondi will review existing FCPA investigations and the act itself. Her directive is to issue updated guidelines or policies “to adequately promote the President’s […] authority to conduct foreign affairs and prioritize American interests, American economic competitiveness […], and the efficient use of Federal law enforcement resources.” Indeed, the executive order includes provisions allowing Bondi to extend the review period for an additional 180 days if she deems it appropriate.

Future FCPA investigations and enforcement actions are also to be governed by the guidelines or policies she eventually issues.

Despite some media sources interpreting the executive order as the President “green-lighting bribery” or raising the spectre of a “wild west” of corrupt deal making, our assessment, in the short- to medium-term at least, is that there will be little to no change in corporate practices. However, KYC responsibilities could be affected in the long-term should the FCPA ultimately undergo significant alterations or even repeal.

Near-Term: Why US Corporate Practices Are Unlikely to Change

There are several reasons why our clients should not expect to see any radical changes by US companies during this initial review period.

Firstly, the FCPA is suspended but not repealed, while also featuring a five-year statute of limitations.  Indeed, Congressional legislation like the FCPA can only be repealed by another act of Congress; an executive order cannot repeal such a law. While Trump’s Republican Party does have a small majority in both branches that comprise thet legislature — the US House of Representatives and Senate — at the time of writing there are no indications that the Trump administration is pursuing a total repeal.

Moreover, the FCPA’s anti-bribery provisions have a five-year statute of limitations, along with a six year requirement for its Books-and-Records provisions, which “require publicly traded companies to maintain accurate and transparent records that fairly reflect their transactions”. Consequentially, even if Bondi’s updated enforcement guidelines and policy significantly changes how the Department of Justice (DoJ) pursues infractions, that would relate only to Trump’s DoJ.

In other words, violations committed during this period could theoretically be prosecuted by a new administration after the next elections in four years’ time. Guidelines issued by the current Attorney General do not constitute law and can be easily overridden or revoked by the next president.

Secondly, anti-bribery legislation in other countries will still impact companies with international operations. Regardless of the FCPA’s suspension, US companies with international operations must continue to comply with the relevant laws of the foreign jurisdictions in which they operate — where they exist, at least — or they can still face fines and prosecutions. While there is no EU equivalent to the FCPA, it did adopt several related regulations and directives in May 2024, including AMLD 6 and AMLR, which require EU member states to treat bribery as a predicate crime to money laundering, which is then prosecuted in accordance with the Member States’ domestic criminal code.

France, for example, passed its Sapin II Law in December 2016, which was designed to bring France in line with international anti-bribery standards such as those included in the FCPA or the UK Bribery Act 2010. Bribery is also criminalized under the Swiss Criminal Code, covering, since 2016, private commercial bribery in addition to that of public officials.

Finally, the executive order does not mention the Security and Exchange Commission (SEC). Jurisdiction over FCPA violations is divided between the DoJ, responsible for criminal enforcement, and the SEC, responsible for civil enforcement. The latter includes the accounting provisions and civil anti-bribery violations for all publicly traded companies on US stock exchanges and those required to file periodic reports with the SEC. While Trump’s executive order addressed the DoJ, it says nothing about the SEC and, as such, even during this period of suspension and review, remains able, at least statutorily, to pursue civil enforcement of FCPA violations.

Long-Term: How Changes to the FCPA May Impact KYC Duties

Should American companies and interests sense that their enforcement climate has permanently changed, whether through repeal of the FCPA or cross-party consensus around a significantly weakened version, where would we likely see changed business practices emerge? And, importantly, how would such developments impact their know-your-client (KYC) duties vis-à-vis American clientele?

Across the EU, US corporate entities and individuals who operate there or do business with EU entities would still be limited by the relatively strict anti-bribery legislation across the union’s more developed economies. Thus, any changed business practices would more likely be seen in jurisdictions with inconsistent application of laws, lax enforcement, and political interference.

Key examples include India, the UAE, and Saudi Arabia, as well as certain southern and southeastern European nations that are regularly flagged by prominent corruption-focused NGOs as lacking both consistent enforcement  in cases of foreign bribery, as well as transparency and accountability in their public sector contracting practices. Under such a scenario, US companies would face fewer restrictions when competing for contracts or establishing business relations and may feel more comfortable resorting to measures previously been out-of-bounds.

At the same time, while such practices would likely  pose a legal risk to the American entity in question, the suspicion or allegations of foreign bribery would impact EU-based clients already engaging in or seeking to do business with such entities. At the very least, this would legally necessitate enhanced KYC measures.

In Switzerland, for example, those dealing with entities that faced or were convicted of engaging in foreign bribery would be required to follow enhanced due diligence procedures, including ongoing transaction monitoring and reporting to the Money Laundering Reporting Office Switzerland (MROS) if their client’s assets are suspected to be linked to bribery or corruption. Similarly, in France, articles contained with Sapin II require companies to carry out risk-mapping and integrity assessments of third parties, with companies failing to conduct proper due diligence when engaging with high-risk entities facing the possibility of being held liable for failing to meet their anti-corruption obligations.

What to Look Out for in the Months Ahead

The 180-day suspension of FCPA enforcement, which could be prolonged by the Attorney General, will be accompanied by a review whose findings will offer the first clear indication as to how far the Trump administration intends to push its deregulation of US companies’ international practices. As discussed, we do not expect even significant changes to FCPA enforcement guidance to immediately impact American corporate practices in the short to medium term.

However, if the current administration begins signaling that full repeal of the act may be pursued during this period in which the Republican Party maintains control of the bicameral legislation and the presidency—which, as of writing, it has not—a lasting shift in US American corporate practices on the global stage could be possible, assuming, of course, that such a repeal would have sufficient votes to pass.

In the years since 2010, we’ve grown to stand as the leading provider of enhanced due diligence and reputation background checks for the financial industry, trusted by clients and partners worldwide.

We had so much fun celebrating this incredible milestone with our amazing clients, partners, and team—thank you for being part of our journey and for joining us to mark this important anniversary! Here’s to the next 15 years of excellence.

They have been targeting maritime traffic as a response to the Israel-Palestine conflict in support of Palestine, with initial attacks targeting ships with ties to Israel and its citizens.

That said, there have been numerous confirmed attacks on vessels of varying origins with limited, if any, actual ties to Israel. The attacks target vessels transiting through the Bab al-Mandab Strait, the chokepoint between the Red Sea and the Gulf of Aden, forcing the shipping industry, which relies on the trade passage, to undertake longer, and more costly routes to contend with rising insurance and security costs and fluctuating oil prices as a result. With nearly 15% of global seaborne trade transiting through the Red Sea, markets have been affected but it is likely that oil and Liquified Natural Gas (LNG) prices will remain supported unless tensions escalate.

Please click here to read the full article, complete with citations, which was published by our partner, Commodity Trading Club, in their Q4 2024 magazine.

CEO of BRS Barry Faudemer commented, “Clients faced with difficult decisions about a piece of business often ask us for details of a quality provider of Enhanced Due Diligence and Intelligence Reports to help guide and inform their decision making. We are confident in recommending Sqope Intelligence given the high quality of the information, international coverage, in depth-analysis and well-designed reports provided with a flexible pricing structure.

Entering into such an arrangement ensures that we combine our experience and expertise to the benefit of our clients.”

Click here for more information and photos from our joint breakfast briefing.

The investigation came just one year after the WSJ initially reported on the US Federal Reserve’s scrutiny of that bank’s methods for investigating its high net worth and ultra-high net worth (HNW and UHNW) foreign clients and a half year after the newspaper reported that this investigation expanded to include the US Securities and Exchange Commission (SEC), Office of the Comptroller of the Currency (OCC), and other Treasury Department offices.

The bank, which acknowledged having weak AML controls, marked 24% of its wealth management accounts as high risk for money laundering. Furthermore, as early as 2022, an internal risk team found that 60% of international accounts that advisers tried to open had errors, including missing documents and overstated income.

The issue was clearly systemic – the bank did not invest adequately into its AML procedures and prioritized the speed of onboarding new clients over proper vetting practices.

Beyond the documentation issue mentioned above, this was further evident in the lack of Spanish speakers within their vetting staff and low pay for temporary Spanish speakers working in the Baltimore office despite the number of customers in high-risk Latin American jurisdictions being onboarded and courted.

In addition, according to the WSJ, the bank had significant bottlenecks in their AML procedures, which led to the delays in the proper approval processes for thousands of accounts, witht which the bank proceeded regardless of insufficient and delayed vetting. Even basic Google searches — which should be considered a bare minimum requirement for due diligence checks especially for higher risk clients — were not conducted.

Although it’s difficult to determine the number of individuals onboarded by the bank amid the AML failures, the WSJ highlighted the cases of (1) an al-Qaeda (AQ) linked individual, and (2) a Canadian national claiming to be a Romanian princess with a net worth of over USD 5 billion.

Both accounts were open despite glaring red flags and, considering some of the high risk jurisdictions from where the wealth management branch’s clients hailed, there were likely countless other customers that should have never been permitted to open accounts.

To the bank’s credit, since 2022 they have clearly taken significant strides in order to course correct. Indeed, they placed various restrictions on at least ten types of clients, shuttered thousands of accounts in mid-2023, pulled back from high risk business in Latin America, and, in July 2024, announced that they recruited a new head of global financial crimes. Finally, the bank is also investing heavily in technology to increase their efficiency in conducting KYC checks and to address the relatively easily fixable issue of paper documentation that helped contribute to some of the AML inadequacies.

While this particular story focuses on one bank, they are certainly not alone in facing hurdles in properly vetting HNW and UNHW clients, particularly those with foreign nationality and especially those connected to higher risk jurisdictions. Such individuals pose unique challenges, including the breadth of language skills that a compliance team must have for adequate vetting, poor access to official records pertaining to related businesses, or even the inability to independently confirm the veracity of such documents.

These individuals often have an increased likelihood of exposure to multiple jurisdictions with extensive personal and business networks that often include other high profile individuals. In other words, they are at higher risk of exposure to sanctions, corruption, political connections, and even organized crime or terror financing. Of course, alongside these difficulties, compliance teams also face internal pressure to expedite the process so that the client can be onboarded.

It is precisely these sorts of challenges that outsourcing due diligence solves. An experienced enhanced due diligence consulting firm has the trained, expert analysts with the language skills, regional and local understanding, and vetted global sources necessary to provide a comprehensive, 360-degree picture of an individual or company.

A firm like Sqope Intelligence provides the intelligence you need, particularly on complex, difficult cases for which internal teams often lack the experience, time or other resources. With over 15 years of experience, a team of highly trained and experienced analysts who speak over 20 languages, our own proprietary source database and a network of nearly 100 investigators globally, we have the ability to paint a clear picture of your client or prospect, allowing you to make an informed decision on who you want to onboard.

UK sanctions on vessels & the Kremlin-affiliated ‘shadow fleet’

On July 31st, the UK implemented the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2024. Despite the wordy and complicated name, the amendments further specified the criteria for direct sanctions on maritime vessels.

Specifically, they amended regulation 57F, which stated that a vessel may be sanctioned for ‘any activity whose object or effect is to destabilise Ukraine or undermine or threaten the territorial integrity, sovereignty, or independence of Ukraine, or to obtain a benefit from or support the Government of Russia.’  Thus, such activity now includes the transport of dual-use goods, military goods, oil and products that originated in Russia, or any other goods or technology that can be deemed to support Moscow’s war efforts in Ukraine.

This effort came after the UK announced the month prior, on June 13, that it would impose sanctions on Kremlin-affiliated vessels, designating four oil-transporting vessels that were part of its ‘shadow fleet’, along with two vessels that had shipped weapons from and to Russia.

These were the first-ever sanctions on Russian-affiliated vessels by the UK, taking effect on the date of the above amendments.  In practice, this means that the vessels are barred from entering the UK’s ports and can be subject to detention by British authorities. Also in June, the EU followed in the UK’s footsteps, sanctioning 27 vessels as part of its 14th sanctions package against Russia. This included three vessels of the four above-mentioned vessels in the ‘shadow fleet’ that the UK had also designated.

But what exactly is the ‘shadow fleet’? According to UK estimates, it’s a group of around 600 vessels, that are unofficially linked to the Kremlin and transport high volumes of oil and oil products from Russia to other destinations, circumventing Western sanctions, including the oil price cap imposed by the G7.  Indeed, British  government stated that just three of the vessels later designated in September, including Nicolay Zuyev, NS Asia, and Zaliv Aniva, had collectively carried more than $5 billion worth of Russian oil since February 2022.

Moreover, for obvious reasons the vessels that make up this fleet engage in concerted efforts to evade detection and detention by Western authorities. Such deceptive shipping practices (DSPs) include both static and dynamic methodologies, such as GNSS manipulation, referring to the falsification of a vessel’s location, or the use of multiple flags.  As it stands, the UK has designated 37 vessels as of last month, 25 of which are part of the ‘shadow fleet’.  These designations, one after another, coupled with the regulation amendments blatantly indicate that the UK has this ‘shadow fleet’ in its sights and that it is doing what it can to minimise Moscow’s ability to circumvent Western  sanctions on oil and other goods via maritime transport.

Sanctions on individuals

The UK government also amended Regulation 6 (designation criteria) to include additional activities for which a person may sanctioned.  The definition of ‘involved persons’, which refer to individuals essentially supporting Russia’s invasion of Ukraine, now includes the category of “persons owning or controlling, directly or indirectly, or working as a director (whether executive or non-executive), trustee or other manager or equivalent of, an entity” that is deemed to support the invasion. Such a change will likely be used to impose secondary sanctions on executives of companies —whether Russian or not — deemed to be contributing to the conflict on the side of Moscow.

Indeed, the UK’s June announcement that designated the maritime vessels also named seven individuals. These include Russian national Yuri Olegovich Denisov, CEO of the Russian financial services company Moscow Exchange Group PJSC — and a very minority shareholder at least as of 2021 — and Latvian/Israeli dual national Mark Blats, CEO of Israeli tech company Texel F.C.G. Tech 2100 Ltd.  The HM Treasury’s official notice explained their inclusion as due to their status as directors or equivalent of entities conducting business in a “sector of strategic significance” to the Russian government. Their associated companies were also designated.

It seems likely that there were also additional justifications for their designations not mentioned in the announcement. The US Office of Foreign Assets Control (OFAC), for example, stated that not only was Blat’s company connected to the Russian defence industry, but he is also an associate of Russian arms dealer Igor Zimenkov and a business partner of Belarusian national Aliaksandr Zaitsau, both of whom were already sanctioned by the US.

While the UK’s maritime designations, whose list has consistently grown over the last several months, clearly indicates that they have the ‘shadow fleet’ in its sights, its combination with the regulation amendments show that the British government is doing what it can to minimise Moscow’s ability to circumvent Western  sanctions on oil and other goods. With widespread and, in some cases, justified criticism that Western sanctions regimes against Russia aren’t as effective as they could be, including because of sometimes blatant circumvention efforts, these are the kind of concrete steps that are seen as able to help address this gap.

With this in mind and given the pace of the designations of particularly the maritime vessels, we can expect the UK’s sanctions lists to grow, especially targeting those that hold executive positions at companies deemed to be even indirectly supporting Russia’s war efforts in Ukraine. This also means that those who may be at risk of such designations will not be the “usual suspects” who have clear and direct connections to the Russian government, making enhanced due diligence, particularly focused on indirect exposure to the Russian government, Russian state-owned entities (SOEs), and even Russia generally, ever more important.

The list of 24 countries includes three others from the Middle East and North Africa (MENA), namely, Yemen, Syria, and Algeria, the latter of which was also added in October during FATF’s plenary session.

Lebanon’s addition comes just under a year after FATF’s Mutual Evaluation Report, released in December, that specifically commented on the risks from Hezbollah, although it wasn’t named and, instead, referenced as a “major local paramilitary organization”.

The report also noted high-level corruption, tax evasion, trade based money laundering risks, illicit trafficking, and smuggling, among others that are intimately connected with the terror financing risks associated with Hezbollah. Indeed, I discussed exactly this during my recent presentation alongside Baker Regulatory in the Channel Island of Jersey.

It further listed various gaps in Lebanon’s regulatory framework.

This includes the scope of coverage of money laundering predicate crimes, a lack of regulatory independence, poor monitoring for financial crimes, a commercial registry with no requirement for criminal records checks on company founders, and a lack of disciplinary measures against Designated Non-Financial Businesses and Professionals.

The report addressed deficiencies in enforcing existing AML/CFT laws due to a lack of resources, as well as ineffective beneficial ownership identification and poor international cooperation, especially with regards to terror finance and other financial crimes.

Lebanon also faces systemic issues arising from banking secrecy, which is in turn facilitated by the cash-driven economy.

This is not to say that the FATF hasn’t acknowledged the efforts made by Lebanon to address the above and also the significant challenges faced as a result of the ongoing armed conflict with Israel.Indeed, it granted Lebanon two years, instead of one, in order to address the issues raised during the grey listing.

While all such listings impact a country’s financial sector through various means, including damaging its reputation and investment prospects, raising transaction costs due to additional compliance requirements, and causing losses in correspondent banking relationships, among others, we anticipate that the impact on Lebanon will be particularly strong. This is in light of the financial crisis that the country has been facing since 2019, which already impacted its global reputation, reliability, ease of doing business, and other metrics. Furthermore, the conflict with Israel, as well as the high risk for terror financing exposure when conducting business with Lebanon, has served to deter foreign investment.

This, along with the political stalemate and lack of resources, indicates that there is a high risk that Lebanon will struggle in addressing its shortcomings, something well recognized by the global financial sector and demonstrated by FATF granting Lebanon that additional year to address its gaps. Despite this leniency, the international community will likely see Lebanon’s prospects as too low and begin even further reducing business and investments there.

Our main takeaways include:

1. Different terror groups and types embrace varying modus operandi when raising funds across the Middle East and Africa. Institutionalized groups are challenging to detect and use financial institutions to channel funds internationally.
2. Far-right extremism in the UK and Europe is on the rise. Such extremists, for example, utilize social media to circulate information to UK rioters with the aim of promoting violent disorder.
3. Financial institutions need to closely monitor client onboarding and transactions for terror financing red flags. Stringent, systematic, and enhanced due diligence is essential to mitigate this risk.
4. Companies need comprehensive training to identify the warning signs from those funding terror groups and acts, an appreciation of how such groups are spending their money on, and knowledge of how to spot it.