A sanction imposed, a change in shareholder ownership, an escalation in geopolitical tensions – and a reliable partner can become a high-risk trade relationship from one day to another. More complex and fast-moving than ever, compliance risk now arises from multiple, often invisible, sources. Sanctions, reputation, ownership links, investigations, adverse media: the signals evolve quickly and go far beyond financial data. Our experts reveal how to monitor your partners effectively without slowing down your business.
Compliance risk: more than an acceleration, a paradigm shift
In a world where geopolitical tensions, sanctions, fraud and reputational risks are on the rise and can alter a company’s course overnight, compliance risk now has a direct (and increasingly rapid!) impact on a company’s business. Today, the cost of a breach goes beyond fines, frozen payments and cancelled contracts. Reputational damage causes lasting trust issues amongst clients, banks and partners, even for a company operating primarily in its domestic market. Long confined solely to the operational concerns of legal or risk teams, compliance is no longer merely a checking mechanism: it is a pivotal element of commercial risk management and decision-making.
For a company, the ability to precisely assess its clients, partners and suppliers is now a strategic priority. According to the Data & AI Barometer 2026 by Coface x Les Echos Études, data security and regulatory compliance are the top concerns (41%) among the 900 decision-makers surveyed, far ahead of cost or uncertainty regarding return on investment (24%). And with good reason: according to LSEG’s Global Sanctions Index, the number of individuals subject to sanctions has risen by 446% since 2017, with a marked acceleration since the war in Ukraine.
The Ormuz Strait, the Russia-Ukraine conflict, Sino-American rivalry… Geopolitical risk is no longer a distant concern, and can disrupt supply chains in other parts of the world within a matter of days. New sanctions, changes in shareholding, exposure to a particular country or sector, export controls: suddenly, a reputable client or supplier can become a high-risk partner. This is all the more true given that export restrictions and anti-circumvention measures make sanctions even more complex.
We have entered an era where compliance risk is no longer static but profoundly dynamic.
Compliance is now at the very heart of operations: it directly affects a company’s ability to contract, provide a service, pay its counterparties, or simply maintain a commercial relationship.
- Magali Bouron, Risk & Compliance Specialist – LSEG Risk Intelligence.
Why regulatory pressure will not ease
Regulatory pressure is nothing new, but it is increasing considerably, and sanctions are merely the tip of the iceberg in a much broader trend. Duty of care, anti-money laundering, export controls, DORA, the AML Directive, the US BIS… Regulations are multiplying exponentially and the pressure on businesses is mounting:
- In Europe, the CS3D Directive on the duty of care regarding sustainability, scheduled for 2029, will require very large companies to identify and manage risks across their entire value chain.
- In terms of export controls, the US BIS Affiliate Rule targets foreign subsidiaries majority-owned by sanctioned entities. In practical terms, for a business decision-maker, this means that simply checking whether a name appears on a list is no longer sufficient: it is necessary to analyze a third party’s ownership structure, its links with other companies and, depending on the product, its destination and end-use.
- As part of the fight against money laundering and terrorist financing, the AMLA provides for direct inspections, to begin in 2028, of around forty financial institutions deemed to be at the highest risk.
Companies are facing a growing number of new regulations, which also cover very different areas. But they all converge on the same requirement: knowing exactly who their counterparties are.
The challenge for a company is no longer simply to know its counterparties, but to assess the exposure of the entire chain of third parties associated with the commercial relationship, from the closest to the most distant.
- Magali Bouron - Risk & Compliance Specialist - LSEG Risk Intelligence
Knowing your counterparties is now insufficient: how to monitor the entire relational ecosystem
These developments are shifting the center of gravity of compliance risk. The aim is no longer simply to identify a company that has been explicitly sanctioned: this in no way guarantees that this partner is risk-free. Such a partner may pose a reputational risk without having been formally sanctioned, for example if their company is linked to a politically exposed person, if it is directly controlled by a sensitive entity, or if it is named in an investigation into fraud, corruption or money laundering.
Monitoring sanctions is essential, but this data alone leaves blind spots. An advanced compliance risk analysis must cross-reference other key sources:
- politically exposed persons (PEPs);
- the full ownership chain, including directors, shareholders and ultimate beneficial owners (UBOs);
- financial solvency data;
- adverse media, which reveals investigations, serious allegations or criminal links before they threaten your business operations.
Business decisions must absolutely incorporate a comprehensive view of the health of their business partners: creditworthiness, exposure, reputation, compliance and sanctions. This requires mapping all risks and combining systematic checks on entry with continuous monitoring of the company’s relationship ecosystem.
Beyond sanctions, compliance risk impacts the business as soon as you work with unsuitable partners, even indirectly. This can relate to minor incidents and occur within very short timeframes.
– Leeroy Aoulou – Head of Sales Enterprise– Coface Business Information France.
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