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On September 30, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published “Sanctions Compliance Guidance for Instant Payment Systems” (the “Guidance”).  The Guidance underscores the importance of a risk-based approach to managing sanctions risks related to payment technologies such as instant payment systems.

The availability of funds in real time poses a challenge for financial institutions that seek to comply with US sanctions regulations. OFAC recommends that developers of instant payment systems incorporate sanctions compliance considerations in the design and development processes and add compliance features and tools that enable participants and users to maintain an effective sanctions compliance program. Such compliance features and tools may include (1) a messaging system among participating financial institutions to effectively communicate sanctions concerns; (2) an exception to automatic processing to allow investigation of potential sanctions concerns; and (3) minimum sanctions compliance expectations among members of instant payment systems to mitigate overall sanctions risk.

OFAC recommends that all US persons, including US banks and financial institutions, employ a risk-based approach that incorporates at five essential components of compliance: (1) management commitment; (2) risk assessment; (3) internal controls; (4) testing and auditing; and (5) training. Because US banks and financial institutions have unique circumstances and may use different technologies, OFAC recommends that each institution conduct its own assessment to determine effective sanctions compliance controls.

Risk Factors Relevant to Instant Payment Systems

The Guidance highlights the following factors as particularly relevant in assessing compliance risks related to instant payment systems:

  • Domestic vs. Cross Border Payment Systems

The domestic or cross border nature of payment systems may be relevant in assessing the sanctions risk of instant payment systems. Domestic instant payment systems generally pose lower sanctions risk than cross border instant payment systems because transactions are limited to accounts from US banks. OFAC expects that US banks already perform risk-based due diligence on their customers, including diligence to identify any potential sanctions nexus, in order to comply with rigorous US regulatory requirements and examinations. Institutions that utilize cross border payment systems should assess sanctions exposure from non-US banks, which may not be subject to similar regulatory requirements and examinations.

  • Nature and Value of Payment

The nature and value of payments may be relevant in assessing the sanctions risk of instant payment systems. Payments that are consistent with previous customer behavior or that align with previously investigated and approved sanctions implications generally pose lower sanctions risk than payments that appear inconsistent with previous customer behavior. For example, significantly higher value payments or payments made to first-time foreign persons may pose sanctions risks.

  • Emerging Sanctions Compliance Technologies and Solutions

Emerging sanctions compliance technologies and solutions may be helpful in assessing the sanctions risk of instant payment systems. OFAC highlights artificial intelligence tools and other innovative solutions that leverage information sharing between financial institutions, which may improve sanctions screening processes and reduce false positives. OFAC encourages the use of such tools, where appropriate, to mitigate sanctions risk in the context of instant payments.

The authors acknowledge the assistance of Alexandra Kumar with the preparation of this blog post.


Kerry Contini is a partner in the Firm's international trade practice in Washington, DC. She advises companies on export controls, sanctions, and related human rights and supply chain compliance issues. She has been with Baker McKenzie since she was a summer associate in 2005 and started as an associate in 2006. Kerry has been ranked in the Up and Coming categories for Export Controls & Trade Sanctions by Chambers Global (2022) and Chambers USA (2021), with clients highlighting that "her advice and solutions are business-focused" and that she is "very practical and easy to work with." Kerry has been recognized as a “standout” member of Baker McKenzie’s international trade team by Legal 500. Legal 500 reported a client as stating that, “Kerry is thoughtful, practical, efficient, and has really invested in getting to know our business and our team.” Kerry was recognized in the Who's Who Legal 2021 as a Global Leader in Trade & Customs - International Sanctions. Kerry has written on export controls and trade sanctions issues for a number of publications, including WorldECR, The Export Practitioner, and Ethisphere. She has presented on pandemic-related supply chain issues to the US International Trade Commission. Kerry has been quoted in a number of publications, including Global Investigations Review and Asian Legal Business. She is an editor of the Firm’s Global Supply Chain Compliance blog and is a regular contributor to that blog as well as the Firm’s Sanctions & Export Controls Update blog. Kerry is a co-chair of the Export Controls and Sanctions Section of the Association of Women in International Trade. Kerry is part of the diversity and inclusion leadership for the Washington DC office and is a member of the BakerWomen Steering Committee. She has maintained an active pro bono practice throughout her career at Baker McKenzie and is co-chair of the Washington DC office pro bono leadership team. Kerry has worked on a wide range of pro bono matters, primarily focusing on public international law, animal advocacy, and election protection. She is an active member of the Animal Law Committee of the Environment, Energy, and Natural Resources Community of the DC Bar.


Alexandre Lamy joined Baker McKenzie in 2009 and currently works in the Firm's International Trade Practice Group. He assists clients with sanctions and export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and he advises clients on corporate compliance matters. Alex contributes regularly to Baker McKenzie's Sanctions & Export Controls Update blog.
Since August 2021, Alex has been the co-chair of the ABA Section of International Law’s Export Controls & Economic Sanctions Committee. Prior to that appointment, he served on the steering group and as a Vice Chair of the Committee, starting back in August 2011. Alex has organized multiple events regarding recent developments in US trade sanctions and export controls for the Committee.
Alex was recognized in Who's Who Legal 2020 Edition of its Global Guide to Trade & Customs Lawyers as a "leading individual" in North America on International Sanctions and the publication reported that he "attracts applause for delivering 'a practical service which understands the needs of the business'. His 'ready availability to clients, thorough research and strong presentation skills' are further acclaimed." He was also recognized in the 2019 Edition of the same publication as being "much sought after by clients who praise his 'advice of the highest quality' and add, 'He is technically very good on OFAC sanctions issues and military/dual use export controls.'" Alex was named by Financier Worldwide in, “POWER PLAYERS: International Trade & Sanctions 2021 - Distinguished Advisers.

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