Sanctions on Russia: here's the consolidated version of the FAQs from the European Commission

Nearly two years after the beginning of the war, a new regulatory document on sanctions on Russia

The beginning of 2024 for Italian and European financial institutions is very similar to that of two years ago. At least at the regulatory level, as one of the most relevant regulatory updates among those recently issued (22 December 2023) by the EU concerns sanctions against Russia. In fact, a little less than 700 days after the beginning of the war, the European Commission has published the consolidated version of the FAQs on sanctions imposed on Russia over the past two years, following the aggression against Ukraine. A document that highlights how, even today, the fighting is not only happening on the ground, but also on a financial and economic level. Indeed, from February 2022 to the present, the political response by the European Union against Russian aggression against Ukraine has come mainly through many banking sanctions imposed on Russian individuals, companies, and banks. These measures were implemented through regulatory changes to the CFSP (Common Foreign and Security Policy), thus through regulatory updates in the areas of anti-money laundering and counter-terrorism - summarized by the acronym AML - and, in general, all changes to regulations related to foreign operations. Therefore, once again this year, keeping up with banking regulatory updates related to the war in Ukraine will be a challenge for the compliance functions of financial institutions. A challenge that, with the help of Daitomic’s Artificial Intelligence - Aptus.AI's RegTech solution - can be overcome.

The legal framework of sanctions on Russia: from the updates to CFSP to the EU Decisions and FAQs

Trying to make a brief summary of the development of sanctions by the European Union against Russia, we can start with the first tranche of measures, which came very soon after the start of the invasion into Ukraine (at the end of February 2022), with the aim of blocking the most important Russian banks and freezing the bank accounts of individuals connected to Vladimir Putin's circle. But the escalation of sanctions imposed on Russia by the EU did not stop at the initial mandate. More changes to the EU's CFSP (Common Foreign and Security Policy) were enacted during 2022 and beyond. In fact, sanctions have also been enforced through other regulatory updates, with a series of measures against Russia throughout 2023. All the way to the most recent EU action related to the war in Ukraine, namely the publication of the consolidated version of the FAQs drafted by the European Commission on the implementation and interpretation of European Council Regulations number 833/2014 and 269/2014.

Without Daitomic? Late transposition of regulatory updates and slow normative analysis

From the picture just painted about the sanctions imposed by European banking authorities on Russia, it is clear that there is an urgent need for financial institutions to benefit from timely and accurate monitoring on many regulatory updates. But also regulatory analysis activities are currently too slow and inaccurate to enable compliance functions to be not only reactive - and often late -, but also proactive and even strategic with respect to business. Yes, because, in addition to sanctions by the EU on Russia, the whole area of AML is constantly evolving, and financial compliance professionals therefore have to deal with continuous updates to monitor and analyze, as quickly and accurately as possible. This is almost impossible today, given the amount and frequency of regulatory changes issued by regulators, of which the FAQs issued by the European Commission on sanctions against Russia are only the most recent example. In an environment like the financial one, which is so highly regulated and constantly evolving, in the absence of adequate technological tools, it is almost impossible to make quick decisions based on accurate information.

With Daitomic? Real-time regulatory interception and analysis, alongside Generative AI

The complexity of this situation, however, can even turn into a business opportunity for financial institutions that will equip themselves with tools that can revolutionize compliance. Such as Daitomic, the RegTech SaaS that leverages Aptus.AI's proprietary Artificial Intelligence to generate a machine readable electronic version of regulations, enabling automated collection of regulatory updates and their comparative analysis, still through AI. Such a tool enables financial institutions to keep up with ongoing regulatory updates, including those related to sanctions against Russia and the complex AML regulatory perimeter in general. How? First of all, Daitomic makes it possible to prepare for the entry into force of measures in advance, thanks to the regulatory outlook function, which allows for analysis within the platform even of regulations in the stages prior to official publication. In addition to this, Daitomic sends email notifications - automatically and in real-time - regarding all updates pertaining to the regulatory areas of interest - in this case the AML. But, in addition to optimizing so-called regulatory alerting, Daitomic can also automatically identify related regulatory obligations and cross-reference them with the impacted internal procedures of a specific financial institution. That is why, with Daitomic, the monitoring and analysis of regulatory updates can be transformed from a burden and cost center into a business opportunity and lever, thanks to:

• constant and timely monitoring of the regulatory perimeter of interest;
• a real-time regulatory gap analysis on all selected sources;
• an instantaneous impact analysis on internal procedures and policies impacted by regulations in their evolution.

In a nutshell, Daitomic offers speed and precision in the interception and analysis of regulatory updates, in a current context of slowness and lack of accuracy. Two limitations that, currently, do not allow many compliance professionals to do their job well. Daitomic, however, significantly reduces the time required for the most time-consuming day-to-day activities and provides accurate and up-to-date legal information in real-time, enabling financial compliance professionals not only to make timely decisions based on reliable data, but also to proactively and strategically plan activities related to regulatory compliance. Besides, Daitomic now includes an innovative Generative AI service - Daitomic Chat - that instantly provides answers that would have required hours of work and specialized legal expertise.