What is Sanction Screening Process?

Schuyler "Rocky" Reidel

Schuyler "Rocky" Reidel

Schuyler is the founder and managing attorney for Reidel Law Firm.

Reidellawfirm.com | What is Sanction Screening Process?

Financial crimes are multiplying as the business landscape trends towards the digital realm.

Another vulnerability is our move away from fiat currency.

Sanctions breaches, whether intentional or otherwise, are exposing owners to higher risk.  That’s the bad news.

But the good news is that you can prevent this event.

Reviewing global sanctions lists is one way.  I’ll discuss more in the following sections.

Keep reading to build out your screening process.

Major Sanction Lists

You maintain compliance with regulatory bodies by first learning about the important sanctions lists.

Then you assure that legitimate transactions fill your ledgers.

National and international bodies:

  1. Office of Foreign Assets Control (OFAC)
  2. European Union
  3. United Nations

OFAC maintains the Specially Designated Nationals and Blocked Persons List (SDN).

Others:

  • Unverified List (UVL)
  • Denied Persons List (DPL)
  • Entity List (BIS)

The United Kingdom and Canada also have separate directories worth inspecting.

In the UK, check the Consolidated List of Financial Sanctions Targets.  And for our northern neighbor, check out the Consolidated Canadian Autonomous Sanctions List.

Dow Jones and World Check are two other sources for pertinent data.

International law is an area worth staying out of unless you’re a trade lawyer like myself.  Because you have a business to run.

You can reduce sanctions risk by checking the websites of each body mentioned above.

Apply your screening processes to:

  • Partners
  • Customers

Next, I’ll provide reasons to make the effort.

Importance of Sanction List Checks

Above all, you want to ensure compliance with sanctioning bodies.  You can effectively identify disfavored parties through careful review.

Entities subject to restrictions:

  • Organizations
  • Countries
  • Individuals

Their numbers run in the thousands.  Sanctions screening software is one method for keeping up with these shifting lists.

Risk management for your business is the end goal.

Financial stability is possible by avoiding:

  1. Terrorist financing
  2. Fraud
  3. Money laundering

And you prevent those three by not engaging in transactions with sanctioned entities.  Because once you’ve granted them access to your financial system, it is difficult to keep them out.

Technology is sophisticated enough that any cybercrime on their part is hard to detect.

Infringing on embargoes and economic sanctions can also pose a threat to national security.  Stay on the government’s good side by checking multiple sanctions lists.

Moving on, I’ll share how handing off this process is helpful.

What Are The Benefits of Sanction Screening Services?

Today, you have access to tools that use advanced screening algorithms.  They make risk assessment more efficient.

Thus, helping your bottom line.

But technology won’t ever be a standalone, indefinitely requiring the human touch.  Hiring an international trade expert is also wise.

This person can manage your overall sanctions screening program.  I’ll touch on this subject more later.

Back to the topic at hand.

Perks of screening systems:

  • Limit false positives and false negatives
  • Satisfy anti-money laundering (AML) regulations
  • Quickly check every sanctions list

Do you research and ask peers about the software they’ve adopted. 

Weigh the advice against how much you trust the individual.  The word of a mentor should be placed higher than that of a new acquaintance.

The internet has a wealth of review sites and blogs on the pros and cons of each tool.

Take your time and devote more than a single weekend to your search.

Diligence will increase your protection against unintentionally working with sanctioned entities.

Our world is changing rapidly, so emphasize attention to detail.  And slow.  Down.

Ultimately, guaranteeing legal financial transactions enables your business to grow.

Sanctions violations will do the opposite.  You choose which sounds best.

I’ll cover preemptive regulatory compliance in the next section.

How to Implement an Effective Sanctions Screening Process

Sanctions screening requirements necessitate rules being outlined and followed.  By yourself, employees, and those in a business relationship with you.

Your specific approach to decreasing reputational risk should factor in relevant regulations.  But also, your business challenges.

Regardless, commit to make data management central up front.

Steps to take:

  1. Determine potential risks
  2. Choose sanctions screening solutions
  3. Get internal buy-in
  4. Verify sanctions data
  5. Audit program periodically

Seek professional assistance as a means of preventing financial crime.  Beyond a dedicated cybersecurity team, this includes legal help.

Select appropriate software to handle your transaction screening.  And efficiently browse each sanctions list.

There’s nobody more interested in avoiding significant fines and severe penalties than you.  However, staff play a key role in helping achieve this outcome.

Train them well.

Your program should be scalable as you expand operations.  And adapt to changes coming from regulatory authorities.

Get employee feedback on its ease of use and effectiveness as well.

Now I’ll provide advice based on experience as a trade lawyer.

Top Tips for Effective Sanctions Screening

I want to wrap up with more ways to keep sanctioning bodies appeased.

Screening processes must be strong enough to withstand an ever-evolving set of trade restrictions.  Which are due to a fluctuating geopolitical climate.

We see it today with Russia, China, and other nations facing constrained trade.

Tips:

  • Move beyond initial risk assessment
  • Formulate customer data properly
  • Move towards automation earlier

Beyond organizing data, you also want to protect it from nefarious elements.  That entails hiring trusted cybersecurity experts in your home country.

Don’t skip this step as it helps prohibit illicit activity from outside your business.

Artificial intelligence is here to stay.  But the automation I’m referring to is within the software or tools you’ve already added for sanctions compliance.

Naturally, you know what’s best for your operation.  But don’t rule out additional help.

To conclude, I’d like to suggest one such guide.

Reidel Law Firm Navigating International Sanctions

As experts in international trade law, we can help you handle the legal aspects of sanctions risk.

And in doing so, keep international organizations and our government happy.

Conducting business across borders becomes much easier when they see reasonable care taken.  We are your partners in making this a reality.

Our international trade law division also supports:

  • Import Compliance
  • Litigation before the Court of International Trade (Section 337, anti-dumping/countervailing, and other trade-related cases)
  • Trade Compliance Audits and Training

Call Reidel Law Firm today at (832) 510-3292 or fill out our form to see how we can help you avoid potential sanctions violations. 

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