(Sponsored content). Marco Dias Roque is a Director of Product Management at LSEG Risk Intelligence, where he leads global risk and compliance data products. He is responsible for advancing high-quality, scalable data solutions that support financial institutions in managing financial crime, regulatory compliance, and operational risk
Sanctions exposure is becoming increasingly difficult to assess. Looking beyond sanctions lists to understand the impact of ownership structures, control relationships and individual financial instruments is an important part of managing risk.
Determining whether a security may fall within applicable sanctions restrictions is rarely straightforward. Ownership and control provisions, such as the US Office of Foreign Assets Control's (OFAC) 50 Percent Rule, can extend potential exposure beyond directly designated entities. Differences across sanctions regimes add further complexity, requiring analysis of both the legal framework and the facts of each case.
As sanctions requirements evolve across jurisdictions, evidence-based analysis can help organisations understand and assess potential exposure.
The changing nature of sanctions exposure
Sanctions compliance has become more demanding as ownership structures, regulatory frameworks and market activity evolve.
Research by LSEG Risk Intelligence found that approximately one-third of securities linked to sanctions were identified through ownership and control relationships rather than direct sanctions designations. This means that instruments issued by companies that are not themselves designated may still require further assessment where ownership or control links exist with sanctioned entities. Indirect exposure can arise through ownership and control pathways, not only through explicit sanctions designations.
The same research found that approx. 60% of sanctions-linked securities remained active in the market during the period analysed, highlighting that sanctions exposure is not limited to legacy holdings. It can affect trading, settlement and investment activities, creating operational and compliance considerations.
As sanctions regimes evolve, legal teams need access to information and analysis that can help them understand potential exposure at the level of the individual security.
Navigating multi-regime sanctions
Definitions of ownership and control can vary between jurisdictions, and approaches to indirect exposure are not always consistent. As a result, sanctions assessments often require consideration of both the applicable legal framework and the facts of each case.
The same research also found that rights and entitlements, debt instruments and structured products accounted for approximately 80% of affected securities within the dataset analysed. These instruments frequently involve layered ownership structures, embedded rights and corporate actions, each of which can make legal and compliance assessments more challenging.
Better data for more informed analysis
As sanctions regimes expand and indirect exposure becomes more difficult to identify, legal teams face pressure to understand how sanctions measures may affect individual securities. Indirect exposure may require analysis that goes beyond traditional screening approaches, particularly where ownership and control relationships extend beyond directly designated entities.
Legal practitioners need information that connects sanctions designations with ownership structures, corporate actions and other characteristics of individual securities. Assessing potential exposure requires analysis at the instrument level, considering factors that may not be apparent through issuer-level screening alone.
This challenge is particularly relevant in cases involving complex ownership structures, layered corporate relationships or differing interpretations of ownership and control across jurisdictions. In such circumstances, understanding the connection between a security and a sanctioned entity may require a more detailed examination of the underlying relationships and rights attached to that instrument.
Access to more granular sanctions and ownership data can support these assessments by helping organisations identify potential direct and indirect exposure, investigate ownership and control relationships, and assess the implications of regulatory developments across multiple jurisdictions and asset classes. Specialist datasets, such as LSEG Sanctioned Securities Data File, are designed to provide this level of instrument-level visibility.
For legal advisers, more precise information can help contribute to a better-evidenced assessment of potential sanctions exposure. Used alongside legal expertise, jurisdiction-specific analysis and professional judgement, it can support more informed decisions in a complex and evolving regulatory environment.
As sanctions requirements continue to evolve across jurisdictions, understanding exposure at the level of the individual security has become an increasingly important aspect of risk management. Clear, well-structured data can help legal teams assess potential exposure more effectively and support legal analysis grounded in the relevant facts and applicable regulatory framework.
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