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Evolving sanctions and AML risks: Recommendations for reporting entities

Updated: February 06, 2026

Recent geopolitical developments—including heightened U.S. actions related to Venezuela, the seizure of sanctioned oil tankers linked to Russia, and protests in Iran—have resulted in significantly increased U.S. sanctions. These events directly elevate money laundering, terrorist financing, and sanctions evasion risks for financial institutions and other FINTRAC reporting entities.

U.S. sanctions administered by the Office of Foreign Assets Control (OFAC) apply extraterritorially in certain circumstances (for example, where there is a U.S. nexus, or U.S. persons involved). Canadian financial institutions must comply with OFAC sanctions because of this jurisdictional reach, business necessity, and risk management realities. 

These events are unfolding quickly and are accompanied by frequent updates to sanctions lists, vessel designations, and ownership structures—particularly in the oil, shipping, and commodities sectors. As a result, Canadian reporting entities are well advised to take immediate, practical steps to ensure their anti-money laundering (AML) and sanctions controls remain effective and appropriately reflect this elevated risk environment. 

In this article, we outline clear actions reporting entities can prioritize now.

number 1

Revisit your risk assessment—now, not at the next annual review

FINTRAC expects risk assessments to be living documents that reflect emerging threats, including sanctions evasion and maritime based typologies. Recent geopolitical developments have elevated risk in particular areas:

  • Venezuela-related transactions, including oil, shipping, and trade finance
  • Russian “shadow fleet” vessels and ship-to-ship transfers
  • Complex ownership and control structures designed to avoid sanctions
  • Expansions of sanctions against Iran and specific officials

Immediate actions

  • Perform a targeted refresh of your enterprise-wide money laundering, terrorist financing, and sanctions risk assessment
  • Re evaluate exposure to: 
    • High-risk jurisdictions, including indirect exposure
    • Products involving trade, commodities, shipping, or correspondent banking
    • Customers with exposure to oil, energy, or logistics sectors
  • Clearly document why risk ratings have changed or why risk ratings remain the same

number 2

Update sanctions lists daily

U.S. authorities are changing sanction designations frequently, particularly in relation to individual vessels, shipping companies, and beneficial owners connected to Venezuela, Russia, and Iran. A delay of even one day can result in missed sanctions and control failures.

Immediate actions

  • Confirm that sanctions lists are updated daily, or even more frequently where possible. Ensure vessel level sanctions and “blocked property” designations are included
  • Validate that your screening tools: 
    • Capture alias names, secondary sanctions risks (where applicable), vessel name changes, and re flagging
    • Apply ownership aggregation rules (e.g., OFAC’s 50% rule)
  • Re screen both existing customers with exposure to energy, shipping, or other high risk trade routes, as well as any open transactions that have not yet settled

number 3

Apply enhanced due diligence where risk has increased

FINTRAC guidance makes it clear that higher sanctions evasion risk warrants enhanced measures, not business as usual controls. This is particularly relevant for customers and transactions with elevated exposure.

Immediate actions

  • Refresh know your client (KYC) information, including beneficial ownership, source of funds, and source of wealth
  • Reassess transaction purpose and expected activity. Ensure transaction screening capabilities include risk indicators such as cargo, ports, and vessels
  • Assess whether additional approvals, tighter transaction limits, or more frequent ongoing monitoring are warranted based on the revised risk profile.

number 4

Re educate front line and AML employees

Fast moving geopolitical events and resulting sanctions create operational risk if staff are unaware of what has changed or how those changes affect day-to-day decision making. Even well-designed controls can fail if client-facing teams do not recognize red flags or understand when to escalate issues.

Immediate actions

  • Issue a concise internal communication covering the nature of the recent sanctions developments, key risks and red flags to watch for, and how to escalate concerns
  • Ensure sanctions and AML teams have access to updated guidance and clear escalation paths for time sensitive issues

How BDO can help

BDO’s team offers a full suite of AML and Economic Crimes services to assist reporting entities in responding to rapidly changing risk environments.

Our professionals can assist with:

  • Rapid risk assessment updates in response to emerging developments
  • Assessment and testing of sanctions screening and transaction monitoring controls 
  • Reviews of customer due diligence and escalation frameworks
  • Targeted advisory support to identify and remediate sanctions related gaps

For more information, please reach out to us.

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