What if Russia was suddenly removed from global sanctions lists?

Imagine starting your morning as a compliance officer and discovering that all Russia-related sanction programs have been removed from the United States Office of Foreign Assets Control (OFAC) sanction lists overnight.

There are no explanations or warnings, just a sudden blanket reversal of restrictions for over 4,000 Russian and Russia-related individuals and entities.

This isn't just a geopolitical shift. It's a test of compliance, risk management and ethical decision-making for you as a compliance officer. What would you do next?

This thought experiment highlights the dual role of compliance, both as an interpreter and enforcer of regulations and as a defence against financial crime. If Russia were removed from sanctions overnight, the response wouldn’t be as simple as flicking a switch in your screening tool and that’s it. There are far more considerations, both from the business and ethical angles, to take into account. 

Moral dilemma: Is complying with regulations enough?

Even if legally permitted, does removing sanctions mean it is ethically sound to resume business as usual with Russian clients?

Compliance teams are often the last line of defence against financial crime. Here are some key considerations:

• Does legality equal legitimacy?
  • Just because regulators have removed sanctions, does this mean the risks have disappeared? Financial crime concerns rarely vanish overnight.
  • If a sanctioned individual was considered high risk yesterday, should they be trusted today simply because a regulation changed?
    
    
• Should enhanced due diligence continue?
  • Even if not legally required, should your firm voluntarily maintain higher scrutiny of Russia and Russian-related individuals and entities?
  • Politically exposed persons (PEPs), state-owned or partially state-owned enterprises, and high-risk industries (e.g. weapons, gambling), may still pose significant risks if you were to onboard them as a client.
  • Could maintaining internal EDD policies provide an extra layer of protection against financial crime? Would that be enough to satisfy or mitigate the risks presented?
    
    
• Reputational risk vs. business opportunity
  
  • How would stakeholders, including clients, partners, investors, suppliers and regulators, react if your firm started to engage with Russian interests?
  • Would continuing restrictions on Russian business align with your firm’s ethical values and long-term risk appetite?
  • If competitors or peer institutions are hesitant to engage with Russian entities, does taking a wait-and-see approach provide a strategic advantage? Or does your firm stand to gain a strong first-mover advantage by engaging first?
    
    
• Who benefits or loses from this change?
  
  • If state-linked oligarchs or entities with previous financial crime concerns re-enter global markets, would enabling their transactions contribute to potential future harm?
  • Are there unintended consequences, such as the potential funding of illicit activities to continue active conflicts or contribute to geopolitical instability and forced displacement?
  • On the flip side, if your firm refuses to engage with Russian clients, does that present potential discrimination cases?
    
    
• The precedent it sets
  • If sanctions can be reversed so abruptly, what does this mean for long-term sanctions policy credibility?
  • Could compliance teams assume that future reversals could occur just as suddenly?

A step-by-step tactical response to this hypothetical scenario

The key priority is ensuring your firm remains compliant while adapting to the new sanctions changes.

1. Verify the change

Before making any internal adjustments, verify the legitimacy of the update.

• Verify this sudden change with the official US OFAC list. Since US sanctions often influence UK, EU and global sanctions policies, also check the UK Office of Financial Sanctions Implementation (OFSI) list, the EU's consolidated sanctions lists, and UN Security Council Sanctions. Is this a unilateral action by one government or a coordinated effort across multiple countries?
  
  
• Look for government statements and regulatory guidance to confirm this isn't a temporary or mistaken update.
  
  
• Seek clarification from regulatory contacts, industry peers, compliance groups, and specialised sanctions legal teams (if available) to understand the broader implications for your firm.

2. Review KYC and onboarding processes

Any internal rules, controls and process changes should be discussed and signed off with senior management.

• Clients previously restricted due to Russian links may now be eligible for (re)onboarding as clients. Develop a plan to handle potential applications, as this might present a significant business opportunity for the firm. On the flip side, there could be repercussions with engaging, e.g. reputational damage. 
  
  
• Determine if enhanced due diligence (EDD) is still necessary for Russian clients, particularly those with prior higher-risk indicators.
  
  
• Revise your risk assessments and customer onboarding processes to reflect how your firm is planning to evaluate Russian and Russia-related entities applying for new business or re-engagement.

3. Update internal sanctions screening rules

• Remove Russia and Russian entities from sanctions screening lists so that your sanctions screening sources reflect the latest data. If you are using an external tool to help with your sanctions screening, contact them to confirm that they have reflected the latest changes. Revise and document your screening settings and algorithms to reflect the changes. This may need to be done in conjunction with your external screening provider.
  
  
• Test that these changes have been actioned by screening previously sanctioned individuals and entities.
  
  
• Adjust your firms’ ongoing monitoring and transaction monitoring rules that previously flagged Russian connections.
  
  
• Keep an audit trail of changes for compliance purposes. Keep detailed records of all related actions and decisions, as changes in the sanctions regime can occur frequently and take effect immediately. 

4. Communicate internally

• Update policies, procedures and training materials to reflect the new guidance. Brief the board, risk committees and frontline/client-facing teams on how to approach Russian-related business moving forward. 
  
  
• Conduct training for compliance, business intake and client services teams to ensure they understand the overall changes in sanctions, alterations in AML policies and due diligence requirements. You may wish to hold a quiz session at the end to assess whether the team has retained the knowledge. 
  
  
• Prepare clear responses for your client-facing teams to respond to potential client inquiries regarding your firm’s policies and approach.

5. Assess paused transactions and frozen clients

• Review any payments, ongoing transactions, or clients that were frozen or blocked due to Russian sanctions. Based on your updated risk assessment and appetite, are they now permissible?
  
  
• You may be able to begin to process transactions and release funds and assets for Russian and Russia-related clients. Consult legal and regulatory teams before releasing funds or processing transactions to avoid reputational damage.
  
  
• Identify potential regulatory grey areas. Just because sanctions are lifted doesn’t mean there aren’t restrictions in other forms, such as industry-specific controls.

6. Engage with regulators, compliance peers and industry bodies

• Contact regulatory authorities directly for clarification on broader implications of the sanctions changes. Given the widespread impact of this change, there may be guidance documents outlining the change and expectations for reporting entities in more detail.
  
  
• Consult peer institutions to see how they are responding to gauge industry sentiment and identify potential best practices and learnings.
  
  
• Attend financial crime and compliance events and industry associations to understand varied approaches to this regulatory change.

A compliance officer’s judgement call

Ultimately, compliance isn’t just about following the rules. It’s about ensuring financial integrity, ethical decision-making, and protecting the financial and professional services from abuse. While laws may change overnight, your responsibility to assess risk and act with integrity remains constant.