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6/28/2022
Sanctions on Russia: how to get regulatory obligations and impact analysis in real-time
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Regulatory updates and automatic analysis: here’s Daitomic's real-time compliance

From the very beginning, the war in Ukraine is not only fought on the ground, but also on a financial and economic level. If the the bombings and clashes of recent months certainly represent the hardest aspect of the conflict, the political response by the NATO and the European Union has also had a great impact on Russia, through various banking sanctions imposed on Russian individuals, companies and banks. These measures against Russia were implemented through regulatory changes to the EU CFSP (Common Foreign Policy and Security), which forced financial institutions across Europe to rapidly transpose and analyze all the updates relating to anti-money laundering and anti-terrorism regulatory areas - summarized by the acronym AML and presented in a dedicated post - and, in general, all the regulatory changes with an impact on foreign operations. But is it possible to keep up with the continuous banking regulatory updates related to the war in Ukraine? With the help of Daitomic, the RegTech AI-powered solution to keep financial compliance professionals updated in real-time on the continuous regulatory changes to the CFSP and, in general, on the decisions by European banking regulators.

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Sanctions on Russia: the regulatory framework, from CFSP updates to EU decisions

Trying to summarize the history of the sanctions imposed on Russia, we must start with the very first tranche of measures by the European Union, which arrived immediately after the invasion of Ukraine, at the end of February, with the Regulation (EU) 2022/259 of 23 February 2022 - which amended Regulation (EU) no. 269/2014 - and the Decisions (CFSP) 2022/264, 265, 266 and 267 of 23 February 2022, aimed at blocking the most important Russian banks and freezing the bank accounts of individuals connected to Vladimir Putin. But the escalation of sanctions on Russia as a measure to counter the offensive against Ukraine did not stop there. During the month of March, other changes to the EU CFSP were issued, namely the Decision (CFSP) 2022/395 of 9 March 2022 - which modified the decision 2014/512/CFSP - and the Decision (CFSP) 2022/628 of 13 April 2022 - which modified the Decision (CFSP) 2022/266. But not only. The sanctions were also applied through other regulatory updates, such as the Decision (EU) 2022/947 of 1st March 2022, relating to the bankruptcy of the Russian bank in Slovenia Sberbank Bank, and the Implementing decision (EU) 2022/500 of 25 March 2022. The measures against Russia then increased in April with other regulatory updates, including Amendment number 394 of 21 April 2022 - which amended Council Regulation (EU) 2022/394 of 9 March 2022 -, up to arrive at the most recent interventions of the European Union relating to the war in Ukraine, namely the Decision (EU) 2022/762 of 12 May 2022, with which the European Union undertakes to result from the suspension of the Russian Federation from the Memorandum of Understanding ("MOU") of Paris, and the Regulation (EU) 2022/877 of 3 June 2022, which extends the sanctions also to Belarus, due to the country's involvement in the Russian aggression on Ukraine.

Financial Compliance and Risk Management: how to keep up with regulatory changes?

This framework relating to the sanctions imposed by the European banking authorities on Russia would already be enough to express the urgency by financial institutions to receive rapid and accurate information about regulatory updates. Not only. Even the regulatory analysis - the identification of the regulatory obligations related to the changes and also of the policies and internal processes impacted - is currently too slow to keep pace with the continuous banking regulatory updates. Yes, because, in addition to the EU sanctions on Russia, which continue to increase in number and weight due to the protraction of the war in Ukraine, the entire AML regulatory area is in continuous and constant evolution in terms of changes. And financial institutions have not only to deal with anti-money laundering and anti-terrorism, but also with the ESG (Environmental, Social and Governance) issues and all the other regulatory updates that need to be transposed (two well-known examples are the PSD2 and the "Quick Fix" to MiFID II). Financial compliance professionals therefore need to monitor and analyze a huge amount of updates, but they also need to carry out these activities fast and accurately. This is currently very difficult, given the quantity and frequency of regulatory changes enacted by regulators, like the recent changes to the CFSP by the EU to sanction Russia, which are just the best known examples.

Updates on changes to the CFSP and the AML regulatory area in real time with Daitomic

However, as we have anticipated financial institutions are not left alone in facing this complex situation. At Aptus.AI we have created Daitomic, the SaaS solution dedicated to the RegTech market exploiting Artificial Intelligence to allow compliance professionals to make the right decisions in a reasonable time. The AI ​​engines underlying the platform create a standardized electronic and machine readable version of banking regulations, thus automating the collection of regulatory updates and their comparative analysis, thus allowing humans to focus on the decision-making and strategic aspect.

The image above shows how Daitomic enables users to interactively consult and compare, in a few clicks, different versions of any updated banking regulation.

In addition to this, the platform also sends customizable email notifications to keep users updated - automatically and in real-time - on the regulatory areas they are interested in.

But Daitomic goes far beyond, as each email alert on a regulatory update of interest directs users to the macro-requirements section of the platform, where it is possible to easily prepare an impact analysis. This section shows the regulatory obligations automatically extracted by the AI engines and links them with the impacted internal processes, thus preparing the ground for value-added human activities. Daitomic is therefore able to automate all those steps of financial compliance workflows that don’t require human interpretation and decision-making skills, as we show on a dedicated page of this website. Are you curious to test the features of Daitomic? Click below and try it for free!

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