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Geopolitical tensions are reshaping the global regulatory landscape, making sanctions, export controls, and financial crime risks critical factors in cross-border deals.
Financial crime risk must be a core consideration for private equity firms
For PE firms, these dynamics increasingly influence deal feasibility, valuation, and exit certainty. Sanctions and broader financial crime considerations are no longer peripheral compliance issues; they are embedded deal risks that require proactive management throughout the investment lifecycle. The ability to identify geopolitical exposure early, monitor regulatory developments, and integrate robust controls is now central to preserving value, ensuring transaction certainty, and safeguarding investor interests.
Sanctions compliance is a prime example of geopolitical deal risk
The current global sanctions landscape reflects the disruptive forces shaping the geopolitical environment—economic, societal, political, regulatory, and technological. Sanctions and countersanctions affect operations across sectors such as financial services, energy, defense, aviation, and digital assets. No industry is immune, particularly where dual-use goods or cross-border ownership structures are involved.
Sanctions are a highly visible manifestation of geopolitical financial crime risk. As tensions rise, sanctions, export controls, anti-money laundering exposure, and corruption risks often converge, creating a complex compliance environment for investors.
The wave of restrictions imposed by the EU, U.K., U.S., and other sanctions regimes is followed by noticeable moves towards greater enforcement for violations or circumvention. Sanctions compliance has become a core element of financial crime prevention, with significant regulatory and operational consequences for non-compliance. At the same time, robust sanctions compliance frameworks can create tangible value.
Recent cases highlight the stakes for private equity firms navigating sanctions risks.
On December 2, 2025, the U.S. Office of Foreign Assets Control announced an approximately $11 million settlement with a U.S.-based PE firm for dozens of potential violations of Russia-related sanctions. Authorities found that the firm had accepted investments linked to a sanctioned individual through an intermediary and failed to block those funds after the individual was added to the sanctions list.
Conversely, on June 16, 2025, the U.S. Department of Justice declined to prosecute another PE firm after it had voluntarily disclosed sanctions and export control violations discovered in an acquired portfolio company. The PE firm cooperated with investigators and remediated the issues in the portfolio company, while enforcement actions proceeded against responsible individuals and the operating entity.
These cases underscore an important point: sanctions and export-control risk can arise both at the fund level and within portfolio companies. Accepting capital from sanctioned or sanction-linked investors can create direct enforcement exposure for a PE firm. Likewise, acquiring a company with weak sanctions or export-control compliance can result in liability, even where misconduct predates the acquisition.
Sanctions compliance is therefore not merely an operational issue within the portfolio companies. It is a core geopolitical deal risk embedded in fundraising, acquisition, and exit decisions.
Deal and value impact: What sanctions risk means in practice
Sanctions failures can directly erode core value-creation assumptions, disrupt deals, and shrink buyer pools.
Sanctions findings during due diligence can impact deal structuring, pricing, conditionality, and the scope of representations and warranties, particularly where ownership structures, cross-border flows, or politically exposed counterparties are involved.
During the holding period, regulatory scrutiny or enforcement actions may disrupt revenue generation, restrict market access, trigger internal investigations, or require costly remediation efforts. Banking relationships may be reassessed, assets may be frozen, and operational flexibility may be reduced.
At exit, geopolitical and sanctions exposure can significantly narrow the buyer universe. Transactions in high-risk jurisdictions may require regulatory approvals or specific licensing to proceed. In some cases, local authorities may intervene in strategically sensitive businesses until clearance is granted. Lengthy approval processes and parallel cross-border investigations can delay exits, extend holding periods, and lead to valuation haircuts.
Beyond sanctions exposure alone, geopolitical volatility often interacts with other financial crime vulnerabilities, such as corruption, AML deficiencies, or opaque ownership structures, thereby amplifying enforcement and reputational exposure.
For these reasons, PE firms are expected to conduct thorough sanctions, export control, and broader financial crime due diligence not only when deploying capital in acquisitions, but also when raising and structuring funds. This includes screening investors and understanding beneficial ownership structures at fund level, as well as conducting risk-based due diligence on target companies, their ownership chains, supply chains, customer base, and critical third parties. It further requires ongoing monitoring of geopolitical and regulatory developments and adjusting oversight throughout the deal and fund lifecycle in a jurisdiction-specific manner.
How we help PE firms manage financial crime exposure
AlixPartners applies a lifecycle-based approach to integrating sanctions compliance into broader financial crime and regulatory due diligence.
- Pre-investment: We embed sanctions compliance and financial crime considerations directly into the deal process through targeted risk assessments tailored to the industry, products, supply chain, ownership structure, and critical third parties. These assessments are complemented by a structured gap analysis of the target’s sanctions compliance and wider financial crime prevention program, providing early clarity on exposure, control maturity and required mitigation measures before signing.
- During the holding period: We strengthen portfolio companies’ compliance frameworks across core pillars, including governance, risk assessment, internal controls, testing, auditing, and training. We focus on closing identified gaps, reinforcing accountability, and ensuring that the program keeps pace with geopolitical and regulatory developments throughout the holding period.
- As exit approaches: We support management teams in refining and documenting compliance frameworks to demonstrate buyer readiness and reduce transaction friction. A well-structured and evidenced program enhances credibility in due diligence and helps protect value by mitigating regulatory and reputational risk.
Across all phases, our hands-on approach ensures that sanctions and financial crime management support informed decision-making, operational resilience, and long-term value preservation. In an environment where geopolitics increasingly shape financial crime exposure, proactive sanctions and financial crime management is not merely a compliance exercise but a core component of transaction certainty, investor protection, and sustainable value creation.
