Global sanctions trends: the GSI report

• The rate of sanctions inflation continues to slow
• Despite this, sanctions activity levels are at an all time high
• Global enforcement activity is being stepped up

Sanctions have become a key consideration in international relations. Moreover, they are more numerous, diverse and complex than ever before. LSEG has developed an innovative index to track sanctions inflation across the globe – the Global Sanctions Index (GSI).

The latest GSI report highlights a notable and ongoing trend: a slowing inflation rate in global sanctions activity.

Despite the slowdown in growth, the number of sanctioned individuals and entities has expanded significantly since we began tracking the phenomenon in January 2017. There are now over 70,000 unique sanctioned persons globally, representing a 370% increase. In March 2024, the GSI stood at 370, with year-on-year inflation at 16%.

OFAC's robust sanctions activity

The U.S. Office of Foreign Assets Control (OFAC) is the major contributor to sanctions inflation globally.  OFAC now have a sub-index of 260.7, with its annual inflation accelerating to 21.1% in March 2024 compared to the same period in 2023.

The U.N.'s continued decline

United Nations sanctions activity levels remain weak, reaching an all-time low of 1.42% in March 2024.

Ukraine hits the brakes

Ukraine has developed a significant sanctions programme since the Russian invasion began in February 2022, one of the largest in the world. However, activity has recently wound down substantially in the first quarter of 2024.

China slows down

Another major sanctions programme, China's sanctions, were not impacted by Ukraine-related issues in 2022 and 2023 and had an earlier peak than other sanctions programmes.

Sanctions inflation carries some significant consequences for the compliance profession in particular, but the knock-on effects impact the entire organisation, and even society as a whole.

Some notable risks and consequences include:

Non-compliance

The risk of non-compliance with sanctions regulations tops the list, particularly given that regulatory scrutiny is intensifying and that the consequences of non-compliance, including but not limited to reputational damage and financial penalties, can be significant.

Additional complexity

Sanctions regimes are becoming more complex, often because different rules apply in different jurisdictions. This impacts the resources needed to remain compliant, often leading to a need for additional staff, in-house or external counsel and sanctions experts.

Higher costs

Each additional name added to a sanctions list drives up the cost of screening and, by extension, the cost of compliance. More staff are needed, with implications for training, IT and HR resources, as well as licences from vendors, office space and other resources.

Lower efficiency

Match rates are often dominated by false positives, which can typically only be identified after human review. Increased sanctions volume leads to increased false positive rates, which lower efficiency levels.

Wider societal impact

The many risks associated with sanctions compliance can lead institutions to avoid certain types of business entirely, with potential economic consequences. This could even extend to financial exclusion.

The GSI fills a critical gap for compliance professionals, delivering usable sanctions data and insights to help teams stay ahead of the regulatory curve.

Our paper concludes that sanctions indlation has been significant over the last five years, with the number of sanctions more than doubling.

Far more than sheer numbers, however, is the fact that sanctions are becoming ever-more complex. This means that investing in a well-designed screening programme with good matching and reliable data is no longer a nice-to-have. It is now essential.