The Next Trump Presidency: Strategic Considerations for Sanctions & Financial Crime Risk Operations in the First 100 Days

Without the need for a drawn out political process post Election Day, the Trump transition team can begin to evaluate key hires across the government, including the U.S. Treasury Department’s Office of Terrorism and Financial Intelligence, as well as other regulatory bodies.

A combination of new hires at Treasury, as well as at the U.S. State Department and within the National Security Council will largely determine the next Administration’s focus regarding the use of sanctions, as well as the regulation of financial institutions on broader financial crime-related matters. This will also likely impact the budget too, as prioritization and spending come under greater scrutiny.  

While it is too early to know who will be selected for these critically important positions, it is expected that they will likely pick up where things left off for the last Trump Administration, including a number of key foreign policy areas of focus that were present four years ago, as well as those more recently covered on the campaign trail itself.  We do know that the president-elect’s choices for National Security Advisor, as well as a number of other roles that have been announced, are on-the-record as hawkish regarding Iran and China.  

It is also expected that these positions could be filled faster than has traditionally been the case, as the new Administration may seek to expedite appointments, as well as the process around candidate reviews and confirmation.  This means policy shifts could come sooner than maybe originally anticipated, in some senses, are already happening as positions get announced.   

Some immediate thoughts on what to expect:

Iran and everything associated with it quickly comes into focus

Trump pressured Iran (as did the Biden Administration) during his last presidency and will likely ratchet that up in response to its increasing conflict with Israel.  In hindsight, the Trump Administration - and close policy advisors  - lamented earlier decisions to broker a joint international deal with Iran and return billions of dollars, noting that doing so would fuel regional instability and fund direct and indirect kinetic operations.  With this backdrop, we can expect a more aggressive stance on Iran from the president and from those appointed to implement policy.

We would expect to see:

• Increasing pressure on Iran’s energy sector, trade and banking conduits.  Here specifically, research available to Sigma360 suggests that this may raise the temperature on China-based financial institutions that maintain correspondent activities with a number of US and European based financial institutions, as well as money service business and trade finance operations associated with Iran and its economy
  
  
• Further focus on secondary sanctions akin to those put in place during the Bush Administration, striking a “you can do business with the United States or Iran, but not with both” posture
     
• Increasing pressure on neighboring countries, including Iraq, to limit the use of its territory or financial system for Iranian strikes or proxy groups 
  
  
• Utilization of intelligence and bi-lateral information sharing to identify and target front companies and networks (e.g., middlemen and companies) that may be aiding Iran’s economy and/or its ability to access and develop weapons, medium and long-range missiles and fund operations 
  
  
• Significant work across diplomatic and intelligence services to pressure countries that provide ‘escape hatches’ commonly used by Iran to access financial markets and procure weapons, drones and other advanced capabilities to strike adversaries

A myriad of new approaches to pressure and seek to contain China

The new Administration is expected to leverage tariffs (up to 60%) and other tools to address a myriad of threats related to China.  As a reminder, the last Trump Administration took aim at Beijing’s companies on national security grounds (which was further expanded upon by the Biden Administration) and its alleged support for human rights abuses in the Xinjiang region, an effort that deeply frustrated Chinese leadership and frayed diplomatic channels as it became increasingly public.  It is also likely that the origins of COVID are re-opened and re-examined as part of a broader campaign to discredit China and create avenues for American and allied nation business growth.

We would expect to see:

• Further efforts to highlight and restrict Chinese businesses believed to be working against the United States, including those owned and controlled by the Chinese government and associated with its military 
  
  
• A deeper dive into Chinese companies - and those from other nations  - around land ownership, particularly land owned and controlled by foreign companies in proximity to national security-related institutions and American food supply.  This issue has existed and been prioritized at the state level, but will now be escalated nationally  
  
  
• A review of Chinese owned and controlled companies operating in the United States, including those that may be collecting PII data or other sensitive information.  This adds to inquiries already launched to review Tiktok, Temu and others deployed at scale
  
  
• Highlighting of companies aiding or abetting Iran’s military, including front companies and financial institutions in Hong Kong and/or mainland China 
  
  
• Review of companies operating in the United States - and with US companies possessing sensitive information or access to technology - who are not transparent about ultimate beneficial ownership (e.g., see recent case involving Syngenta)

Some softening on Russia, but not all at once

On the campaign trail, Trump stated that he will “solve the Ukraine-Russia conflict” within 24 hours of taking office.  This remains to be seen, however, work toward peaceful resolution of the conflict would represent a de-escalation that could open the door for a review of the current U.S. Government posture on Russia-related sanctions, particularly those that may have significance in the global economy.  This will likely require support from Congress, which has not always been aligned with the incoming Administration.    

We would expect to see:

• Some relaxation of sanctions if the U.S. is successful in de-escalating the Ukraine-Russia conflict on a go-forward basis
  
  
• The potential for tightening of sanctions initially to bring about a faster diplomatic resolution, however, this path seems less likely than an effort to simply resolve the dispute that led to sanctions in the first place.  
  
  
• Some initial areas of sanction relief might include Russian companies, financial institutions and exchanges and business leaders that may have been caught in the initial sanction response following Russia’s invasion of Ukraine in 2022 or as Russia moved to a full war economy more recently.  The breadth of current efforts can be viewed on the U.S. Treasury’s website here.
  
  
• An effort to trade some sanction relief for an agreement on Ukraine, as well as closer alignment between Russia and the United States versus Russia and China; this would likely include agreement to do so between the United States and European allies 

Significant focus on securing the border with Mexico

A key plank of Trump’s campaign was the southern border, stating that he would “seal it on Day 1”.  When and how this begins to manifest remains to be seen, but it will be a major focus and an area of concentration by the incoming Trump Administration and Congress.  

We would expect to see: 

• Significantly more resources for border security, as well as a review of current efforts to use Treasury’s authorities to stem the flow of fentanyl and other drugs from crossing the border - this also relates back to concerns surrounding China’s manufacture of chemicals used in the production of fentanyl
  
  
• More agents, an increase in intelligence gathering capabilities and leveraging of information from the financial sector in the United States to identify and dismantle cartel and smuggling activities 
  
  
• Further utilization of suspicious activity reporting (SARs), including feedback given on their quality and actionability in aiding law enforcement’s work 
  
  
• Executive authorities may also be used in new ways - and even unexpected ones - to meet border-related or border-connected security concerns domestically and abroad 

In summary 

Changes in policy are coming to Washington - and as sanctions are largely a political instrument, so too will the new Administration’s use and focus of these tools.  

The areas of greatest change will be the new people put in place to execute on policy most immediately, but also the overall prioritization of policy regarding sanctions and focus on matters related to financial crime compliance.  While there are many topics not covered above, we expect to see special attention regarding Iran, China, Russia and the border more broadly. 

Firms should start to re-examine their company-wide risk assessment, exposure directly and indirectly to some of these geographic areas and specific programs through clients and trade and the overall maturity of their program to meet what is a rapidly changing policy and risk environment. 

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