A supplier can be clean and the payment can still break. Treasury’s correspondent-account powers can make a payment route commercially unusable because of a bank several hops away that the company never chose.

Sanctions risk is becoming liquidity risk. Losing access to a correspondent can disrupt supplier payments and cross-border cash movement without the underlying transaction itself becoming illegal.

CFOs need visibility into the route, not just the recipient. Real-time bank-risk data, richer payment information and alternative corridors are becoming essential as sanctions enforcement moves deeper into the financial plumbing.

The next sanctions shock for a multinational may not arrive as the name of a supplier appearing on a government blacklist. It could arrive as a payment that suddenly stops working.

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In a Monday (Oct. 5) alert, the Treasury Department’s Office of Foreign Assets Control (OFAC) warned foreign financial institutions that those continuing to transact with sanctioned institutions could themselves be targeted “at any time without advance notification.” OFAC pointed specifically to recent actions against banks that provided sanctioned actors such as Iran access to correspondent banking and the international financial system.

And with global supply chain pressures hitting a four-month high, per The Federal Reserve Bank of New York’s Global Supply Chain Pressure Index (GSCPI) released Tuesday (Oct. 6). The alert is a warning that geopolitical risk can travel through the architecture of a payment.

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