Top 5 Sanctions Mistakes Costing Millions

Arne Mielken
Sep 22
3 min read

🔓 Top 5 Sanctions Compliance Mistakes Costing Companies Millions

Even the most seasoned compliance teams can overlook subtle risks. These aren't just minor oversights—they're blind spots that can lead to multimillion-dollar fines, operational disruptions, and lasting reputational damage. In this blog, we delve into five hidden compliance risks that have cost companies dearly and provide actionable strategies to safeguard your business.

Free Video: Watch and Learn

Think Your Sanctions and Export Control Processes Are Foolproof? Think Again - here are Top 5 Sanctions Compliance Mistakes That Cost Companies Millions

📺 Watch our YouTube video for free: 5 Hidden Sanctions Compliance Risks

This short video exposes mistakes that even seasoned experts overlook—from missed screenings to misclassified exports—and provides practical strategies to protect your business.

Here is what the video discusses

1. Inadequate Denied Party Screening

The Risk:

Many companies rely on basic screening lists and automated checks—but even seasoned teams miss matches if they don’t screen every layer, including banks, agents, and indirect parties.

Real-Life Example: A Swiss-based financial firm settled with OFAC for $3.7 million due to processing transactions involving sanctioned entities without proper screening of all intermediaries.

Tip:Expand your screening to cover all intermediaries, validate against multiple official lists, and audit regularly. Automated tools help, but human oversight is critical.

2. Misclassification of Dual-Use Technology

The Risk: Misclassifying products or software that could have civilian and military applications can result in severe penalties and shipment delays.

Real-Life Example: RTX Corporation paid $200 million in fines for improper exports of classified defense goods due to internal compliance failures.

Tip: Request official government classifications when in doubt, maintain technical documentation, and train staff regularly on dual-use definitions.

3. Ignoring Indirect Supply-Chain Exposure

The Risk: Sanctions risk extends to third-party vendors, subcontractors, or embedded components from sanctioned entities.

Real-Life Example: TE Connectivity was fined $5.8 million for exporting technology components to Chinese entities tied to the military, due to overlooked third-party exposure.

Tip: Audit suppliers and subcontractors, include compliance clauses in contracts, and map your supply chain to identify hidden risks.

4. Missing a Top-Down Compliance Culture

The Risk: Compliance programs often fail when leadership treats them as a checkbox exercise.

Real-Life Example: Herbert Smith Freehills was fined £465,000 for breaching sanctions on Russia, partly due to local staff bypassing processes without top-level enforcement.

Tip: Integrate compliance into leadership KPIs, promote awareness company-wide, and communicate risks and successes regularly.

5. Failure to Monitor a Rapidly Changing Landscape

The Risk: Sanctions and export control rules evolve constantly, and outdated guidance can result in fines or delays.

Real-Life Example: Deutsche Bank paid $258 million in penalties after handling transactions that evaded sanctions due to poor monitoring and outdated compliance measures.

Tip: Establish a living compliance program with continuous monitoring, assign regulatory watch responsibilities, and review processes quarterly.

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