In addition to the particular identifiers of this profile, note that the widget also shows the last time the sanctions list that returned a match was updated. As a result of SEON’s AML lookups, this user has been identified as appearing on Canada’s PEP list. This screenshot shows you an example of a confirmed “hit” on a sanctions list. a comprehensive internal auditing process that generates verifiable documentation of all the protocols put in place and how they were executed.monitoring customers at the transactional level to ensure that sanctioned entities are not being included in the process.the labeling of high-risk customers per the results of those cross-checks, and the continuous monitoring of those high-risk individuals.the suspension of all transactions for confirmed sanctions list matches, and the reporting of the match to the internal designated compliance officer.manually double-checking any confirmed “hits” on relevant lists, to avoid false positives owing to name similarities.politically exposed persons and their relatives and close associates.the cross-checking of that confirmed identity against all relevant lists, including.the confirmation of customer identity at onboarding, likely established over the course of KYC requirements.In general, an effective sanctions screening process will include: Though there are small differences in sanctions regulations from country to country, they tend to align to better facilitate the international business machine.
The sanctions screening process will generally be part of a risk-based due diligence and financial compliance program. SEON provides compliance teams with all the tools needed to help minimize risk and perform AML due diligence.īook a Demo What Is the Sanctions Screening Process? Developing a business model that does not incorporate such a program – with capabilities commensurate to the mandated requirements – may result in either crippling fines or, potentially, the ceasing of all business operations. The importance of a strong FCC or Sanctions Compliance Program (SCP) is thus directly tied to the importance of business operations. Severe and repeat offenders who maintain business contacts with sanctioned entities risk becoming sanctioned entities themselves – the worst-case scenario for any business. These fines, however, can be just the tip of the legal iceberg. In 2022 alone, two of the major international arbiters of sanctions regulations – the Financial Conduct Authority (FCA) in the UK and the Office of Foreign Assets Control (OFAC) in the US – handed out to offenders over $266 million and $42 million in fines respectively. In terms of direct impact on a company’s bottom line, the risk of noncompliance punishments looms much larger. The potential for reputational damage is extremely severe if, for example, a legacy bank were to be publicized as being instrumental in processing funds that ended up in the hands of the Russian war effort. In the case of the former, the benefits of not being a part of criminal or terrorist money laundering should be self-evident. Why Is Sanctions Screening Important?įor businesses in regulated verticals like money services and real estate, the importance of an effective sanctions screening process is twofold: being part of the effort against terrorism and international money laundering, and minimizing risk from noncompliance punishments. However, with the right resources, this is a challenge that all businesses can be adequately prepared for. Many governing bodies are aware of the challenges that developing an airtight Financial Crime Compliance (FCC) program entails, citing both the ever-expanding sanctions lists themselves, as well as the financial mechanisms in place to hide ultimate beneficial ownership. Failure to do so in an effective way can result in punishments that vary in severity – but all of which represent a huge risk for the success of ongoing business operations. Implementation of a strong sanctions screening protocol is a commitment from that entity to do their due diligence when it comes to preventing money laundering, terrorism, and other financial crimes.ĭepending on applicable national jurisdictions, there are hundreds of different sanctions lists maintained by various governing bodies that must be observed. The sanctions screening process is a requirement for financial bodies and other regulated industries, and will be part of a greater KYC program.
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