Capital in the Crossfire: Sanctions, Indirect Exposure and the New Geopolitics of Financial Risk

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The focus on sanctions risk in 2026 is shifting. Exposure is no longer just about screening counterparties or transactions. It is increasingly found embedded in capital markets – in passive index allocations, layered fund structures, securities clearing systems, commodity-linked finance and complex ownership chains.

At the same time, sanctions are being deployed more overtly as tools of economic and political policy. Recent developments – from the continuing Russia-Ukraine conflict and the evolving enforcement approaches globally, to renewed tensions involving Iran – illustrate this. Alignment across the US, UK and EU is less uniform than in previous cycles, and secondary sanctions continue to influence market behaviour beyond formal jurisdictional boundaries.

For financial institutions, the challenge is not just reacting to one-off policy announcements. It is grappling with structural complexity. Across APAC, supervisory expectations are also evolving, with regulators signalling a heightened focus on look-through capability, embedded portfolio exposure, ownership transparency and board-level governance and oversight.

This industry briefing will examine:

• The current sanctions landscape and the impact of recent geopolitical developments

• Navigating regulatory fragmentation and the influence of secondary sanctions

• Identifying and managing indirect exposure embedded within securities, indexes, and fund structures

• Practical approaches to managing the complexities of beneficial ownership and the 50% rule

• Building a robust governance framework that meets evolving supervisory expectations in APAC