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Essential Guide to Sanctions List Screening

Essential Guide to Sanctions List Screening
List Screening

Sanction screening isn’t simple, the process is quite complicated as it involves screening high-risk individuals, companies, and even countries against the sanction lists to avoid potential risks ranging from money laundering, corruption, and terror financing to human trafficking. While there are a number of sanctioning bodies that compile these lists, the HM Treasury list, OFAC sanctions list, UN Sanctions, and, the EU consolidated list of sanctions are some of the prominent names to consider while proceeding with your dealings.

Though sanction lists are updated regularly, one major issue that financial institutions and business entities face is the continuous updating of the list from several regional and international bodies. One sanction body often excludes particular entities from their list, while another may impose a ban on them. It creates many difficulties for those looking for a reliable and up-to-date list.

The million-dollar question is how to obtain up-to-date and accurate data, particularly when querying multiple sanctions lists. They gather data from multiple sources and declutter repeated information to offer a consolidated AML compliance solution.

A Valuable insight into Sanctions Screening 

Sanctions are like boundaries that restrict what individuals, businesses, and even countries can do. The regional and international sanctioning bodies targeted those involved in financial crimes like corruption, financing terrorism, or illegal activities such as human trafficking. Before engaging in any business dealings, it’s crucial for your business to ensure they’re not linked to these illicit activities.

That’s where sanction list screening really shines. It lets banks and other financial institutions quickly check if the people or companies they’re dealing with are on the list of those who’ve been hit with sanctions.

Why is this important? Well, for banks and financial institutions, it’s about keeping things safe. If they find someone on the sanctions list, they freeze their accounts and stop them from doing any more business. It’s all about preventing financial crimes. So, if you’re in business, getting mixed up with these sanctioned entities could spell trouble for you.

Are Manual and Automated Screening Different? 

Manual screening can be quite hectic. While you can check sanction lists using online platforms or by reaching out to a compliance officer who will individually review the sanctions lists of various bodies, it’s still not reliable and not recommended for businesses.

On the other hand, an automated and integrated source of scanning allows businesses or individuals to access the lists of sanctioned people from one or all sanctioning bodies on a single platform.  These advanced software programs are programmed to systematically scan databases of sanctioning entities or transactions and cross-reference them with sanction lists.

Sanction Screening in AML Compliance

Getting a reliable and updated list of sanctioned people and companies with AML compliance is what everyone is looking for. Sanction screening checks streamline the process, enabling businesses to adhere to the pertinent regulations in their jurisdiction effortlessly. One such example is that the US restricts their citizens from engaging with companies or individuals involved in such illegal activities.

Types of Sanctions list  

Sanction screening is a way to keep checks on cross-referencing transactions and business partners against lists of banned individuals or companies. The bodies you must know about are as follows.

OFAC (office of foreign asset control) Sanction list 

This sanction body is particularly handled by the US Department of the Treasury, and their main aim is to sanction those entities that are directly or indirectly involved against any US foreign policy posing a threat to the state’s national security. The severity of sanctions depends on the type of crime, but most probably, the sanction list consists of asset freezes, trade restrictions, and travel bans.

EU Consolidated List of Sanctions 

This regional sanctioning body enlists those engaged in human rights abuses, conflicts, and other types of violations. The body believes that by putting sanctions on these entities, like freezing their assets, imposing travel bans, and restricting them to trade can help promote adherence to international norms.

UN Sanctions List  

The United Nations Security Council ensures that global peace is maintained. And for those who pose any sort of threat to international peace, the United Nations is on the list of sanctioned people, restricting them from engaging in any sort of business with legal entities and, to some extent, freezing their assets.

FATF (Financial Action Task Force) BlackList 

FATF, an intergovernmental organization, assesses countries’ efforts to combat terror finance and money laundering. Those failing to meet standards risk global isolation, resulting in limited trade and investment opportunities.

Are there any other checkboxes? 

For businesses at risk of engaging with sanctioned companies, obtaining reliable sanction screening solutions is crucial. Neglecting compliance could land your business on the sanction lists. An AML screening solution, compliant with AML regulations has become undeniable under current circumstances.

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Written by Meet Deltan

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