Hidden Clauses, Hidden Risks

In December 2024, Andrejs Bradens, (a US sanctioned Latvian businessman based in London) was revealed to have secured a US $23.4 million contract from Ukraine’s national hydropower company through a Turkish entity, (Altair Lojistik) which wasn’t directly linked (on paper) to the sanctioned businessman.

This case is a simple but perfect illustration of how vague scope, opaque structures, and insufficient oversight can enable a bad actor to secure a major contract which can lead to financial crime, operational and reputational damage.

Without mandatory provisions like FinCrime/Sanctions warranties, audit clauses and contractor transparency, organisations, even state entities, risk engaging unknowingly with bad actors.

Financial crimes concerns are no longer a just conversation for Financial Institutions, they affect every commercial, non-commercial entity and individuals.

As much as contracts govern third party behaviour, they can also be weaponised to hide fraud, corruption, or sanctions evasion and regulators now expect due diligence beyond KYB and onboarding, they’re looking at contractual inclusions and contractual oversight throughout the lifecycle.

For a business, the proactive identification of red flags not only protects your organisation, but it also shows regulators and stakeholders that you're serious about your compliance and their confidence.

We are now in an era of rising financial crime regulation and contracts are no longer just legal tools, they’re risk exposure documents, so while contracts are intended to formalise relationships and mitigate risk, they can also become blind spots that enable financial crime if not properly scrutinised.

Some of the most common FinCrime red flags to keep in mind are:

1.    Nonstandard or High-Risk Jurisdictions

2.    Right to Subcontract Without Oversight

3.    Lack/Vague Dispute Resolution Terms

4.    Lack of Audit or Vague Termination Clauses

5.    Vague or Opaque Payment Terms

These contractual red flags, among others, can expose an organisation to a range of financial crime risks, that’s why reviewing contracts with a compliance and risk lens is not just best practice, it’s increasingly a commercial and regulatory expectation.

To strengthen your personal and commercial defences with tailored solutions, I welcome the opportunity to connect.

JOA Solutions

Clarity Compliance. Confidence.