When sitting firmly in the post-trade environment, it is not immediately clear why firms such as clearinghouses and custodians should be concerned with managing sanctions risk (see sidebar 'What are sanctions''). Surely that would be handled by banks, brokers, and other parties earlier in the trade life cycle. In fact, that's not the case. Recent regulatory enforcement actions make it clear that securities services firms with exposure to sanctioned countries carry a high level of responsibility. And the cost of noncompliance is high: In the European Union, regulators have levied fines of '480 million since 2017 (compared with approximately '57 million in the United States), including about '90 million in 2024 alone.1'EU sanctions enforcement has tightened but varies between countries - experts,' Baltic Times, June 11, 2025. As of March 2025, there were 82,000 persons (individuals and entities) designated for sanctions globally, a nearly fivefold increase from 2017. In the United...
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