Assessment of the High Level Review of Un Sanctions

Sanction lists are growing daily and sanctions published by the multiple unlike issuing bodies don't ever align. Coupled with this, the definition of sanctions is broadening and is condign more open to interpretation, making it more hard than always for businesses to effectively identify and manage sanctions risk. This all-time practice guide on sanctions screening provides useful advice to help you overcome these challenges.

What is a sanction?

A sanction is a preventative measure frequently implemented by governments and international bodies to change behaviour, prohibit illicit action and adjourn undesirable actions past certain loftier-hazard persons or groups.

What is a sanctions list?

A sanctions list is a compilation of individual sanctions that can be applied to individuals, countries, groups or companies. Sanction lists are often collated by governments or international bodies such equally the European union.

Managing SANCTIONS RISK has never been then complex.

• Sanctions lists are evolving constantly.

As governments increasingly rely on economic sanctions as a tool for political foreign policy, new entities are added to and removed from sanctions lists, all of the time.

• The nature of sanctions is becoming more complex

Whereas governments previously targeted only specific named entities (states, ships, shipping, organisations and individuals) in their sanction lists, now narrative and sectoral sanctions have been introduced targeting specific sectors and prohibiting specific activities, which are more open to estimation.

• Sanctions aren't limited to the entities themselves

Organisations owned or controlled by sanctioned entities likewise need to exist in telescopic of sanctions lists and compliance programmes. Additionally, customers who aren't on a sanctions list but have a relationship with a sanctioned entity could also present a risk.

• There are multiple sanctioning bodies with their own sanctions lists

The multitude of sanctioning bodies, including sovereign states, regional unions and international organisations such as the United nations, each publish their ain sanctions – which don't always align.

Who are the relevant SANCTIONING BODIES?

For UK businesses, the almost relevant sanctioning bodies include the European union, HM Treasury, Usa Office of Foreign Assets Control (OFAC) and the Un Security Council. Beyond these, companies may also need to consider other sanctioning bodies depending on the territories in which they trade, the currencies they trade in, and their partnerships and alliances.

EU Consolidated List of Sanctions

The EU consolidated list of sanctions applies to:

• all European union citizens, wherever they are located in the world
• corporate entities constituted in a member state

HM Treasury Sanctions Listing

The United kingdom of great britain and northern ireland consolidated listing of financial sanctions targets applies to:

• all UK citizens, wherever they are in the world
• corporate entities trading in, or constituted in the Uk

OFAC Sanctions List

The specially designated nationals and blocked persons list (SDN) applies to:

• all U.s.a. citizens, wherever they are in the world
• corporate entities constituted in the United states
• whatever entity that:

o trades in US dollars

o uses U.s.a. appurtenances or components

o has a US parent, subsidiary or affiliate

o and/or work through a local agent or supplier with a Us connection

Un Sanctions

The United Nations Security Council sanctions list applies to:

• all UN Nation states

Which companies and industry sectors NEED to screen for sanctions?

All businesses are obliged to comply with sanctions screening requirements, and therefore demand to have adequate controls in place. Historically, enforcement actions take been more than prominent in Financial Services, only other sectors take also received significant fines and some regulatory bodies are increasingly turning their attending to other industries. For example, the Office of Financial Sanctions Implementation (OFSI) has published financial sanctions guidance for charities and non-governmental organisations. Additionally, the US OFAC has issued meaning fines to organisations across a wide range of sectors outside of the United States for not having conducted advisable sanctions checks. View this guide to U.s. OFAC sanctions for more item on whether your business is in scope and how not to breach OFAC sanctions.

It's not just customers who present sanctions take a chance…

Organisations should consider the take a chance exposure in their supply chain – diligently checking sanctions controls and ownership structures of their partners and affiliates.

HOW does sanctions screening work?

Sanctions screening involves screening individuals, groups or companies confronting designated sanction lists according to the territories in which an organisation trades, the currencies they trade in, and their partnerships and alliances. This can take the form of manually inputting a name into an online search tool, checking a customer database for any sanctions alerts en masse, or automatically screening customer and stakeholder databases regularly.

WHEN should sanctions screening be performed to ensure sanctions compliance?

Companies need to exist able to go along footstep with the ever-changing sanctions landscape to stay compliant. To manage sanctions chance effectively, organisations need to screen their customers (both existing and new) and payment transactions against multiple sanctions lists, which tin be a challenge, particularly where volumes are high.

Sanctions screening should take place both at the point of onboarding and on an ongoing basis, then that when new sanctions are issued, they can exist identified and actioned speedily. For some businesses, this can mean screening millions of customers daily, including new applicants aslope their entire existing dorsum book.

Sanctions screening CHALLENGES

The real claiming for many companies is not only to find customers who are on sanctions lists and prevent them from transacting with the business concern, merely also to avoid disrupting the client journeying for legitimate customers and undermining the efficiency of the company's operations.

Other cardinal challenges include:

• Nether or over screening

If organisations practise non screen robustly, there is a danger of 'false negatives', where entities bailiwick to sanctions sideslip through the net.

Conversely, over-screening tin upshot in organisations generating high volumes of 'fake positives', where non-sanctioned entities are flagged equally potentially sanctioned. These faux positives need time and resource to remediate to ostend they are not sanctioned.

• Equivalence

Whilst previously commonplace, relying on a third political party for sanctions compliance or 'equivalence' is no longer acceptable. For example, banks historically relied on the sanctions screening controls of their contributor banks for mutual customers. This is no longer permissible.

• Divergence

In certain cases, the economical sanctions applied past unlike sanctioning bodies are inconsistent. For example, with Iranian sanctions, OFAC and the EU have a different stance – OFAC has decided to reinstate sanctions against Iran, whilst the EU is still providing sanctions relief and encouraging European union businesses to engage with Iran. When transacting with an entity sanctioned by one trunk merely not some other, y'all should exhibit extra caution and implement additional controls.

TOP TIPS for effective sanctions screening

1. Set up your customer data well
2. Use proven, reliable applied science to back up sanctions screening
3. Screen confronting loftier quality and comprehensive sanctions data

Sanctions Screening Tip 1: Prepare your Customer Information well

It'southward critical that client data is up-to-date and it's worth investing time, upfront, to cleanse and prepare information. Incomplete or inaccurate data will result in false positives and when companies are screening millions of customers daily, this can become a real trouble.

Where possible, it is prudent to use information enrichment software to append secondary identifiers, such equally date of birth, address and nationality for individuals, or business organization address and registration number for companies. This will assistance screening platforms to focus results and will greatly ameliorate process efficiency, saving time in unnecessary remediation, which can take up to 18 hours for a single lucifer. *

Sanctions Screening Tip 2: Apply proven, reliable Engineering to back up screening

It'due south important to ensure that the sanctions screening software you use to support your screening is fit for purpose. Here are some of the fundamental considerations yous should take into account:

• Capacity to handle loftier volumes and to scale for business growth

The sanctions screening software you use to support your sanctions checks has to be both stable and scalable, enabling you to screen the volumes of customer and transactions that your concern requires. For many companies, this volition amount to millions of records daily.

Does your technology provider have the resource and infrastructure to ensure your screening and onboarding systems are operationally resilient in the long term?

• Convenient with customisable settings

The engineering science platform should be like shooting fish in a barrel to utilize and offering configurable chance-based settings, then that y'all tin can avert over-screening and adjust screening criteria to lucifer your arrangement'due south hazard appetite.

The platform should also have workflow tools to manage the remediation of sanctions matches in a logical fashion.

• Proven functionality and the ability to automate

Having industry-proven functionality and the ability to automate tasks is vital, every bit this will help ensure the process is effortless and efficient all the way through from the initial loading of files, through to the results.

• Capabilities such as fuzzy logic matching will increase effectiveness and help avoid false negatives.
• An 'accept list' function is critical, so that once customers are cleared by screening, they will not exist re-screened unless the data on their file changes in some way. This is particularly important when volumes of records are loftier, equally it avoids the needless re-screening of records which have seen no alter.
• Appointment postage stamp functionality ensures that whatever searches take an audit trail, evidencing for both regulators and internal stakeholders that adequate procedures have been followed.

Sanctions Screening Tip 3: Screen against high quality and COMPREHENSIVE sanctions data

To ensure you are identifying sanctions from all relevant bodies, the data you screen your customers against must be comprehensive and upwards-to-engagement and, ideally, consolidated all in one place with other watchlist databases such as politically exposed person lists.

Some businesses rely on search engines to locate such information, but this is inefficient and could leave your organisation exposed to sanctions breaches and reputational chance.

To have conviction in your compliance, consider whether the data source you rely upon:

Is curated by a global network of experts

Full coverage of global sanctioning bodies requires multi-lingual research experts around the world to collate the information on a 24/7 footing.

Whilst the data inside sanctions listings must be returned as originally published, the best researchers will add value by providing additional contextual information. The same research can also employ to politically exposed persons to ensure profiles are fully substantiated.

Offers a consolidated view of global sanctions lists

An individual or concern could be listed on any number of the multitude of sanctions lists. Consolidating all associated sanctions listings into a single view could improve efficiencies, and help avoid missing any sanctions.

Conversely, screening confronting data taken solely from the relevant authority may exist more efficient – consider whether your information source offers both options.

Has standardised sanctions records

Sanctions lists come in a diverseness of formats and sizes. Being able to view them in a standardised mode, whilst retaining the original data equally published, tin can raise the sanctions review process.

Adds and updates sanctions listings as before long as possible

Sanctions listings are always changing, with new sanctions being added and existing ones amended or retracted. Being aware of change at the earliest possible opportunity following a sanctions notice is critical.

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Source: https://www.infocreditgroup.com/news-room/articles-and-infographics/sanctions-screening-best-practice-guide

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