The document discusses the complexities surrounding ownership and sanctions compliance in a globalized financial landscape, highlighting dynamic ownership structures and the challenges posed by updated sanctions and corporate actions. It emphasizes the need for financial institutions to continuously analyze ownership data and maintain up-to-date compliance frameworks due to constant changes in ownership and the ever-evolving sanctions environment. Specific examples, such as the case of Octo Telematics and sanctions involving Russian oligarchs, illustrate the tangible risks that arise from indirect ownership and the intricate relationships between sanctioned entities.

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Hosted by SIX
Stay ahead of the changing
Sanctions landscape
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Moderator:
Panelists:
Stephen Brosnihan
Regional Director, Sales Support
Operations for North America
SIX
Anders Rodenberg
Head of Financial Institutions and Advisory, Americas
Bureau van Dijk, a Moodys Analytics company
Jeff Bellemare
Senior Data Consultant
SIX
Megan Brooks
Senior Manager, Economic Sanctions Risk & Program
Charles Schwab

3. OFAC 50% rule and different ownership
Aggregation  rebranding of “50% rule” to “0.1% rule”?
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4. “Sanctioned or not?”
Complexity example from Orbis: cascade down, indirect and aggregation ownership
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5. Globalization…
Owners Subsidiaries
Sample from Orbis on a Sanctioned entity
…has led to very complex corporate ownership structures
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6. Ownership is dynamic
• 7,000 updates an hour
• 456 million ownership
links since 2012
• 43 million beneficial
owners identified
• 5 million edits, every
month
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7. Octo Telematics in USA was not
sanctioned in 2017 and beginning
of 2018.
The ownership in the example goes
from USA to Italy, UK, Luxembourg,
Cyprus, Bahamas x 4 and ends in
Russia.
Viktor Vekselberg was just a PEP
until…
Example of change
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8. • 7 Russian nationals
• 17 senior Russian government officials
• 1 state-owned Russian weapons trading
company
Also listed 12 companies under control and 1
subsidiary, but due to the 50% Rule the number
was
• More than 1,400 companies
• More than 100! in USA
Octo Telematics was one of them until Chairman
John Peace and Chief Executive Fabio Sbianchi
purchased 20% of Octo Group SPA’s shares from
Nes Investments Sar. OFAC issued licensed on April
30th 2018 confirming Octo no longer subject to
sanctions.
But should it?
April 6th, 2018
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9. Viktor Vekselberg has 75% Influence
Power.
We also need to talk about Circular
Ownership.
Influence power
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10. Circular ownership…
…used to hide ownership from the traditional ownership thresholds
Individual
A
Company
B
Company
C
1%
100%
99%
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11. Ownership is key component for Sanctions
compliance in 2019…
More than 347,000,000
unique positions
More than 40,000,000 companies
with 50% ownership
More than 159,000,000
ownership links
Total links for owners and control -
more than 506,000,000
…but not widely applied in Sanctions programs  Sanctions Exposure
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12. • More than 500+ entities
sanctioned by extension
for Gazprombank alone
• More than 8 levels down
• Constant changes:
acquisitions, names,
percentages…
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13. “But I don’t have exposure to Russia”
Countries with 50% owned subsidiaries of a limited number of sanctioned
entities
Source: Orbis
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14. 2018/19: A turbulent geopolitical landscape
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• 11/2/18: Broad sanctions on Iran reinstated as a result of US withdrawing from JCPOA
• 11/19/18: OFAC & Société Générale settlement of $54 million for sanctions violations.
Part of a larger $1.34 billion settlements with other regulators for Sanctions/AML
violations
• 1/27/19: OFAC lifts sanctions on EN+ and Rusal
• 1/28/19: New Venezuelan EO 13850 adding PDVSA to the SDN list – including 50% or
greater held subsidiaries.
• 4/9/19: OFAC & Standard Chartered settlement of over $600 million for sanctions
violations. Mainly Iran related infractions by Mid-East subsidiaries
• 4/15/19: UniCredit Bank AG settlement of 1.3 Billion for Iranian sanctions
• 4/22/19: US ends Sanctions Waivers on Iranian Oil
How can compliance
departments
keep up?
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15. Financial InformationPage
To maintain a clear view a wealth of data needs to be
linked and analyzed
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Company
Structures
Regulator
Updates
Security
Underlying
Corporate
Actions
Beneficial
Ownership
Core Security
Data
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16. Everyday market changes impact whether a
security is sanctioned or not
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• Corporate actions
• Capital increases
• New sanctions imposed by a regulator
• Change of ownership / management
Keeping your database up to date for pre- and
post- trade suitability is a challenge and a
significant risk
EXAMPLE
RU000A0JXU63 has been issued
by VTB Bank PJSC which is linked
to the sanctioned parent VTB by a
direct or indirect ownership of 50%
at least. The security is a Money
Market Instrument with a lifetime of
1 day, thus it falls under sanctions
exemptions for CA CH EU US
Regimes, but could bring to an
inherent residual risk under the
provisions of e.g. OFAC FAQ 409ff.
SIX recommends to
consider the security
restricted under the
scope of CA CH EU US
regulators.
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17. Financial InformationPage
Successful navigation of
the sanctions landscape
is more difficult than ever
30+ Global Sanctions
2 Sectorial Sanctions
on Russia / Ukraine conflict and
Venezuela
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For illustration purposes only
AU CA CH EU HK OFAC SG UK UN
AFGHANISTAN n n
AL-QAIDA n n n n n n n n
BALKANS n
BELARUS n n n n
BURMA n
BURUNDI n n n n
CENTRAL AFRICAN REPUBLIC n n n n n n n n n
CUBA n
DARFUR n
DEMOCRATIC REPUBLIC OF THE CONGO n n n n n n n n n
EGYPT n n
IRAN n n n n n n n n n
IRAQ n n n n n n n n n
IVORY COAST n n n n n n n
LEBANON n
LIBERIA n
LIBYA n n n n n n n n n
NORTH KOREA n n n n n n n n n
PALESTINE n
REPUBLIC OF GUINEA n n n
REPUBLIC OF GUINEA-BISSAU n n n n n n
SOMALIA n n n n n n n n n
SOUTH SUDAN n n n n n n n n n
SUDAN n n n n n n n n n
SYRIA n n n n n
TALIBAN n n n n n
TUNISIA n n
UKRAINE n n
UKRAINE/RUSSIA n n n n n
VENEZUELA n n
YEMEN n n n n n n n n n
ZIMBABWE n n n n n

18. Financial InformationPage 5/28/20191818www.nicsa.org | #WebinarWednesdays

19. Identifying the “Lemons” is tedious and complex
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Sanctioned &
Potentially
Sanctioned Securities
Match the database
against your
portfolio
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20. 202020
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Sanctioned

21. EN+
212121
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• April 6, 2018: Russian Oligarch Oleg Deripaska designated
pursuant to E.O. 13661
• EN+ and Rusal designated as a result of being majority owned by
Deripaska.
• Deripaska agrees to reduce EN+ holdings from 70% down to
44.95%, relinquish Board control
• Jan 27, 2019: Sanctions on EN+ and Rusal removed
• Represents risk to the financial industry as EN+ has depositary
receipts listed on LSE

22. Financial InformationPage
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ENPL – IOB London International Order Book

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To get in touch with SIX visit:
www.six-group.com/sanctions
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