With geopolitical tension simmering in the Middle East, trade wars between the United States and China, and policymakers increasingly using sanctions as tools of economic policy, compliance teams are navigating a far more dynamic, and high-stakes landscape.
Earlier this month FundApps held a webinar to cover what’s been one of the biggest areas to watch in compliance in 2025: sanctions.
To make sense of it all, FundApps’ lead regulatory expert, Karl Schindler, sat down with Andrew Schlossberg, Counsel and sanctions expert from Akin Gump, and Jeff Teahan, sanctions product specialist at BIGTXN, to unpack what’s new and changing in global sanctions and what compliance professionals should be prioritising.
The 50% ownership rule - sanctions compliance most persistent challenge
The 50% ownership rule remains one of the trickiest parts of sanctions compliance, and addresses the complex ownership chains that might not be visible at first glance.
In short, if a company is 50% or more owned, either directly or indirectly, by sanctioned persons, it’s considered sanctioned too.. Simple in theory, but in practice? As Andrew Schlossberg pointed out, “...a chain of 51% ownership could theoretically extend indefinitely, to the point where an entire entity is blocked pursuant to 50% rule as a result of an SCN that has less than a 10% indirect ownership interest in the downstream entity from a pure corporate perspective.”
For compliance teams, that means simple, top-level screening for sanctioned names often won’t be enough. Teams need both the data and the tools that can trace ownership structures at various levels, capable of surfacing hidden, indirect exposure.
Enforcement has evolved - and so has the risk
Spotting hidden sanctions risk is one thing- but what happens when a firm slips up? Our panel pointed toward OFAC’s recent action as the best indicator, and why exactly managers take sanctions so seriously.
The Interactive Brokers settlement this July - a staggering $11.8 million dollar fine and securities violations - shows that sanctions compliance is effectively treated as a strict liability regime.. Even accidental breaches can result in penalties. OFAC’s expansion of the statute of limitations for sanctions violations from five to 10 years further gives the agency time to investigate these cases and determine penalties and fines.
The expectation is clear: if you have the technology to monitor trades in real time, you need to be using it. Regulators expect automated screening, geolocation blocking, and constant monitoring to prevent trades involving sanctioned entities.
Data quality: The foundation of effective sanctions monitoring
A strong compliance framework is only as good as the data it runs on. It’s the bit that Interactive Brokers ultimately got wrong, and what our panel data expert Jeff Teahan emphasised during our webinar.
“All of those internal processes and policies are important, but you have to source high quality data right now…the data quality has to be perfection.”
That means compliance teams should be asking tough questions of their data providers: How quickly are updates made when new designations are issued? Are ownership hierarchies and control relationships mapped properly? Does the provider have in-house sanctions expertise to interpret complex rulings? At the end of the day, “if you trade an instrument that was sanctioned yesterday, you’re strictly liable for it, even if the blame is on the provider that hasn’t gotten around to updating your file with those sanctions.”
The more complete and timely the data, the fewer blind spots firms will face when screening portfolios.
A new normal
With a geopolitical climate that fans the flame of uncertainty and administrations committed to using sanctions as tools, sanctions compliance is growing more complicated by the day.
Sanctions monitoring can no longer be treated as a routine to-do and a checklist to attend to. Instead, it’s an active, data-driven focus that requires constant vigilance. The firms that invest in automation, ownership transparency, and regulatory awareness are the ones priming themselves to be the best positioned to weather the sanctions landscape in the future.
A recording of our webinar is available on-demand. Sign up to watch Sanctions Unpacked.
