Research reveals serious technology gaps in sanctions monitoring, screening and compliance across the Swiss and UK trade ecosystems of shippers and financing bank
UK – 5 July 2022 – Half (50%) of Swiss shipping organisations and 38% of their UK counterparts have lost business because they were unable to demonstrate compliance with sanctions requirements, reveals new research by Pole Star, the global leader in vessel-tracking, sanctions screening and regulatory technology.
In addition, the research also found compliance departments in UK trade finance organisations on average devote 50% of their time to sanctions screening and monitoring, compared with 43% in Switzerland.
The research, which was conducted among 350 heads of trade, compliance and finance in the trade finance sector in the UK and Switzerland, reveals that while banks in the UK and Switzerland lack technology to screen vessels and transactions, too few carriers and shipping companies can demonstrate compliance with international sanctions. These requirements have become more stringent since the 2020 advisory from the US Office of Foreign Assets Control.
Only 6% of UK shipping companies and 22% of their Swiss counterparts have sanctions compliance and monitoring technology they describe as “excellent and fit for purpose”. It is therefore no surprise that almost two-thirds of UK shipping organisations (65%) and four-in-ten in Switzerland (39%) have been unable to show sanctions compliance when banks asked them for it.
“The advisory from the US Office of Foreign Assets Control makes sanctions compliance a critical necessity, but our research shows how the maritime finance supply chain in the UK and Switzerland lacks adequate technology. Banks, carriers and charterers are risking penalties, embedding inefficiency and losing business because they are not streamlining their compliance and integrating new solutions,” said Simon Ring, Global Head of Maritime Trade Technologies & ESG, Pole Star.
Some 38% in the UK trade finance sector and 32% in the Swiss equivalent simply say their technology is inadequate. In both countries, the biggest challenges in sanctions compliance monitoring and screening for trade finance organisations are:
using multi-point solutions
understanding and keeping pace with regulation
lack of clarity about what now constitutes due diligence
Although 87% of banks and trade finance organisations across the two countries have screening in place, many lack critical capabilities. A third of banks (33%) in the UK and a quarter in Switzerland (25%) are unable to understand the risk profiles of carriers and vessels.
In the shipping sector, 48% of Swiss companies say removing manual processes is one of the three steps that would most improve their compliance. A smaller percentage (39%) of shipping companies take this view in the UK, where more organisations (44%) see significant advantages in having greater accuracy and less false positives in vessel monitoring technology. 46% of Swiss shipping companies also want greater accuracy and less false positives.
Higher percentages of UK trade finance organisations want new capabilities for sanctions-related investigations than their Swiss counterparts. For example, 54% of UK trade finance organisations want to integrate enhanced vessel tracking into their compliance software to detect illicit activity, compared with 42% of Swiss counterparts.
And while 52% in the UK want the ability to detect fraudulent shipping documentation, the figure is 41% in Switzerland. Other capabilities required by financial organisations in both countries include predictive analysis of non-reporting vessels (30% across the two nations), satellite imagery (29%) and analysis of historic AIS gaps (29%).
“Organisations that fail to detect sanctions-busters and inadvertently support illegal transactions risk severe regulatory penalties in a time of increased tension. It’s abundantly clear that companies in the global maritime trading network need to up their technology game to deepen and broaden their screening and compliance capabilities.”