Establishing a Compliance Management System to Manage the Risk of the World Bank Sanctions

When participating in projects funded by Multilateral Development Banks (MDBs) such as the World Bank (WB), enterprises may be sanctioned if they fail to comply with the relevant compliance requirements. If this happens, the enterprises then lose the opportunity to undertake further projects funded by these banks. Using the recent cases of the WB’s sanctions against Chinese enterprises as an example, this paper analyzes the trends and reasons why the WB has sanctioned Chinese enterprises. This paper also explores the types of WB sanctions and the compliance programs requiring the establishment of enterprises. Finally, the author suggests that enterprises participating in WB projects should undertake targeted actions to avoid sanctions, improve their understanding of the sanctions system, strengthen their awareness of compliance risk, and make careful decisions. Furthermore, they should also accelerate the establishment of compliance management systems to ensure systematic and institution-wide self-monitoring and management to enhance their compliance.