Danny McGlynn, president and chief integrity officer at the Institute for Financial Integrity (IFI)
(In lead-up to the FTF webinar, “Find True North for Sanctions Compliance: AVOID EXPOSURE TO SECURITIES TAINTED BY SANCTIONS” on Nov. 7, Nick Holland, director of content & event strategy for FTF, spoke with our webinar moderator, Danny McGlynn, president and chief integrity officer at the Institute for Financial Integrity (IFI). They discussed the evolution of sanctions regimes, the importance of compliance, and strategies for organizations to adapt to changing sanctions and effectively minimize compliance risks. The IFI is dedicated to protecting the global financial system from use by illicit actors through training, certification, and education for the public, private, and nonprofit sectors. Its DOLFIN platform offers e-learning resources for financial institutions integrity professionals. McGlynn highlighted the significant increase in sanctions since 1999, emphasizing their more frequent use and strategic implementation. He reinforced the importance of adhering to Financial Action Task Force (FATF) recommendations and maintaining robust compliance programs to avoid penalties.)
Q: First, as chief integrity officer with IFI, could you unpack your role? What does IFI do, and what is DOLFIN?
A: The Institute for Financial Integrity aims to protect the integrity of the global financial system by building communities and providing training, certification, and continuing education across public, private, and nonprofit sectors in the broader counter-illicit finance mission.
We spun off from K2 Integrity about a year ago, where I spent the last five years developing the DOLFIN platform.
DOLFIN stands for Dedicated Online Financial Integrity Network, named after the Financial Integrity Network (FIN), which was established by former U.S. Treasury officials who helped construct the U.S. and global counter illicit finance regime post-9/11.
They launched a consulting firm to assist governments and financial institutions in establishing effective anti-money laundering (AML) and combatting the financing of terrorism (CFT), and sanctions regimes.
To facilitate training and certification globally, they created the DOLFIN e-learning platform.
Q: So, let’s discuss the upcoming webinar. How have sanctions evolved over the last couple of decades?
A: They have changed tremendously.
I began my career at the Office of Foreign Assets Control (OFAC) in 1999, when there were only a couple handfuls of sanctions programs, primarily comprehensive sanctions against countries like Cuba and Iraq.
Over the years, there has been a proliferation of sanctions programs, with increasing focus on their effectiveness. Sanctions are now a fundamental tool for policymakers to address national security issues. The Treasury Department plays a crucial role in strategizing how to utilize these economic levers efficiently.
While there is still collateral damage, we have become more strategic, using extensive analysis to gauge the potential and real impacts of sanctions before and during their implementation. There is greater collaboration between public and private sectors to ensure financial institutions have the necessary information to enact these sanctions effectively.
Q: What key lessons from this evolution inform today’s compliance landscape?
A: From the public sector, a key lesson is the importance of adhering to Financial Action Task Force (FATF) recommendations and United Nations Security Council (USNC) resolutions regarding sanctions. Countries that fail to do so face sanctions and penalties, which can harm their international standing.
For the private sector, institutions must take compliance seriously.
Over the last decade, penalties for non-compliance have reached billions. Major lessons include understanding risks and adopting a risk-based approach to sanctions compliance. Institutions should also engage in voluntary self-disclosures when potential violations occur, as this can influence enforcement actions and penalties positively.
Q: Thank you, Danny. This was a great introduction to our sanctions compliance webinar on Nov. 7. I appreciate your insights.
A: Thank you, Nick, on behalf of the Institute for Financial Integrity.
ADDITIONAL RESOURCES:
Join Danny and our panel of experts from Schwab, SIX, and Deutsche Bank on Nov. 7th for an interactive virtual discussion, Find True North for Sanctions Compliance: AVOID EXPOSURE TO SECURITIES TAINTED BY SANCTIONS
The discussion will examine how increased regulatory scrutiny related to import/export restrictions, the upcoming U.S. presidential election, and ongoing international conflicts may affect your sanctions compliance program. It will also highlight the steps your firm should take to mitigate risks and avoid costly legal repercussions.
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