Use the links in this page to see all the cross-references and discussions about sanctions and AML regulations across all the sections
Additional background
About sanctions
Sanctions Sudan has faced years of international financial sanctions. The country was subject to financial sanctions by the US since 1997. The United States permanently lifted sanctions on Sudan in October 2017. But the changes in trade with foreign companies are slow to materialise. And the country currently remains subject to UK sanctions [138].
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!! Lifting of the sanctions Following the 2019 revolution, hopes were high that international financial transfers would become easier with the lifting of previous economic sanctions. But the process of delisting banks is lengthy. in practice, Sudanese financial institutions continue to experience the impact of US sanctions and there are challenges in transferring money to Sudanese bank accounts from foreign bank accounts [138].
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?! New economic sanctions are effectively separating Sudan from major international financial markets again [118, 134]. One of the consequences is that the export and import trade financing is likely to become exceptionally expensive again, as many international and regional banks will avoid transactions with Sudanese entities [134].
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On June 1, 2023, the Biden administration imposed financial sanctions on four companies associated with and generating income for the warring parties in Sudan. These sanctions were imposed to address the ongoing conflict in Sudan and targeted two companies on each side of the fighting. In addition to financial sanctions, visa sanctions were imposed on a number of officials who were deemed to have subverted the democratic transition in Sudan. The Biden administration also issued a business advisory update highlighting the risks associated with the burgeoning conflict.
About the effect of sanctions on correspondent banking
!! Incoming international transfers to Sudan have been constrained by the lack of correspondent bank relations. Despite the lift of the sanctions and Sudan’s de-listing from the State Sponsors of Terrorism List in December 2020, correspondant banking relations have not yet been fully restored in Sudan. Correspondent banks are free to determine their risk appetite as they see fit, and the long history of political instability in Sudan combined with the stiff penalties imposed on international banks that breached U.S. sanctions during 2014–2015 have contributed in a high level of de-risking when it comes to engaging with Sudanese banks [138]. See also more below on sanctions and international financial regulations
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Correspondent banking is a provision of banking services between banks that enables domestic banks in Sudan to access the global payment system and facilitate cross-border transactions. This is crucial because Sudanese banks do not have direct relationships with banks in other countries, including donor banks or the NRC's bank in Norway. Therefore, when conducting transactions with international counterparts, Sudanese banks have to involve correspondent banks as intermediaries.
However, the lack of international correspondent banking relationships poses a significant challenge to Sudan's financial system integration. Prolonged economic sanctions and a history of political instability in Sudan, coupled with the severe penalties imposed on international banks for violating U.S. sanctions in the past, have greatly reduced correspondent banks' willingness to engage with Sudanese banks. As a result, Sudan's access to the global financial system has been limited, impeding its reintegration with the international community.
To establish correspondent banking relationships, Sudanese financial institutions need to demonstrate their commitment to anti-money laundering and combating the financing of terrorism (AML/CFT) compliance. This requires implementing necessary policies, systems, and practices to ensure compliance and risk management. Building credibility and trust with international correspondent banks is crucial, as they need assurance that Sudanese banks understand the importance of AML/CFT regulations and are actively working towards compliance [126].
Unfortunately, the ongoing conflict in Sudan has hindered the progress of reforms aimed at reinforcing compliance with AML/CFT regulations. The Central Bank of Sudan (CBOS) has halted its ongoing efforts to enhance the system's compliance, including customer due diligence, monitoring of high-risk customers, and the development of suspicious transaction reports. Additionally, a planned mutual evaluation led by the Financial Action Task Force (FATF) to assess Sudan's progress in AML/CFT compliance has been put on hold indefinitely [126].