What is sanctions screening?
Sanctions screening occurs as part of the name and transaction screening process. It enables financial institutions to guard against working with any individual or organization that appears on any global sanctions list.
This allows the institution to ensure compliance with international regulations and guards against fines, reputational damage, financial loss or doing business with entities that are too high risk for their risk profile.
What is a sanctions list?
A sanctions list is a list that is released and maintained by either a government, central bank, law enforcement agency, or regulator that features individuals, organizations, entities, and even countries that have violated international law, conducted human rights abuses or which carry a security threat.
When part of a sanctions list, those involved may be subject to asset freezes, travel bans or trade restrictions. Their behavior won’t always have been criminal with inclusion on a list sometimes encouraging a change of approach or to meet demands (e.g., the US President may appear on numerous lists of countries that disagree with US policy).
Even so, if wishing to do business in the country that has issued a sanctions list, a financial institution must abide by it or risk falling foul of the regulations.
Are there any examples of sanctions lists?
There are many sanctions lists.
Some of the most well-known include the UN Sanctions List, EU Sanctions List, and the US’s SDN and OFAC lists. Alongside these, there are also many other lists released by governments worldwide (UK Sanctions List, Consolidated Canadian Autonomous Sanctions List, France’s Registre National Des Gels, etc.) and lists released by agencies like the Financial Action Task Force (FATF).
These lists are most often maintained by sanctions and regulatory bodies such as HM Treasury (UK), UN Security Council, and the Office of Foreign Assets Control (OFAC).
What are the benefits of sanctions screening?
Effective sanctions screening ensures compliance with laws and regulations, prevents financial crime, and reduces risk for a financial institution. It also reduces the risk of any fines or legal liabilities.
