Dow Jones stopped supplying Russian banks with sanctions data

The DOW JONES service, the largest aggregator of data on the imposed sanctions, began to terminate contracts with Russian banks, RBC learned.Without these lists, they cannot qualitatively monitor client operations and assess sanctions risks.

Russian banks have a problem with obtaining compliance information about their customers - Western suppliers of data on sanctions lists in force around the world are terminating contracts with them, RBC found out. One of the largest such services, Risk & Compliance from Dow Jones, sent notices to credit institutions to terminate cooperation, sources at two banks that are not under Western sanctions told RBC.

The interlocutor of RBC in a bank from the top 50 explained that the company terminated the agreement with them on May 31, notifying them a week in advance. “These lists are not just some kind of list, it is implemented in banking systems, as a rule, this is not one system, these are expensive and labor-intensive things. And, in fact, everything was built under the Dow Jones lists, payments went through their list, ”he explained, adding that Dow Jones aggregates information about sanctions against individuals and companies imposed by different countries, updates and sells this information to banks in a package. All major players worked with Dow Jones, RBC's source notes. Another interlocutor at a systemically important bank said his organization had received a similar letter from Dow Jones to terminate the contract effective June 1.

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In addition to Dow Jones, credit institutions were also supplied with information about the persons involved in the sanctions lists by Refinitiv (World-Check service) and LexisNexis (WorldCompliance service), Sergey Glandin, HEAD of Sanctions Law and Compliance Practice at Pen & Paper Bar Association, notes. Refinitiv announced on March 16 that it would stop providing all products and services to Russian customers. LexisNexis did not release a message on whether it would continue to do business in RUSSIA after the start of the Russian military operation in Ukraine, but condemned the conflict. Refinitiv, Dow Jones and LexisNexis did not respond to requests from RBC.

Why do banks need sanctions lists

“The principle of these databases is very simple - they collect information from open sources like vacuum cleaners. First of all, these are sanctions lists, this is information about initiated criminal cases, lists from regulators, lists of terrorists, ”Glandin lists. According to the lawyer, based on this data, the compliance departments of banks make decisions whether to open an account for a potential client or not, whether to close it if the client is included in certain lists.

Back in early March, Russia came out on top in the world in terms of the number of sanctions imposed against it, overtaking Iran, Syria and North Korea. According to the Castellum.AI database, as of May 30, the number of Russian sanctioned persons exceeded 10.5 thousand, and before February 22, less than 2.8 thousand of them were subject to restrictions. On February 21, Russia recognized the independence of the DPR and LPR, and since February 24, it has been conducting a military operation in Ukraine.

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RBC's interlocutors also emphasize that such services are integrated into the IT systems of credit institutions and relieve specialists of the obligation to manually check information on various resources - this is done automatically.

“If banks lose the ability to quickly check customers using databases, they themselves risk falling under sanctions , including secondary ones, if they violate certain restrictions,” says Glandin, although he considers fines to be a more significant risk.

“There is a precedent when the French BNP Paribas received a fine of $8.9 billion in 2014 because their Swiss division was engaged in making DOLLAR payments to Iran, Sudan, which was prohibited. And after this incident, all banks immediately set up these programs for tracking the persons involved in the sanctions lists. That is, compliance allows you to insure the bank against big risks at a low price,” the expert explains.

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The loss of the ability to receive data from Western providers of sanctions lists increases the risks for banks, agrees Dmitry Kletochkin, partner at the law firm Rustam Kurmaev and Partners. “However, given the recent “orgy” of sanctions against Russian business, the question of the importance of this information is beginning to fade into the background,” says the lawyer.

Are there alternatives

Sources of RBC in two large banks said that they do not work with Western providers of sanctions lists, but there is a Russian analogue - the X-Compliance system from Interfax. As noted on the company's website, using the service, for example, you can assess the risk levels of a particular client, check whether he is mentioned in the sanctions lists of different countries and associations, and whether he falls under the "50% rule" ( US , EU and UK sanctions apply not only on the persons involved in their blacklists, but also on the companies that are 50% or more in their ownership. -).

“There is such a standard - there should be two databases, conditional World-Check and X-Compliance, to double-check information, because no system is 100% perfect. And what’s more, compliance procedures require the frequency of data rechecking by different employees,” notes Glandin. The lawyer, however, admits that in the current conditions, "Russian banks will be able to live normally only with the Russian X-Compliance."

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