Given current world events, sanctions screening has never had a more prominent role in helping to diffuse an international conflict. Whether you’re new to the sanctions world or a seasoned professional, it’s worth taking a look at these sanctions fast facts.
It’s estimated that only about 5% of sanctioned individuals, entities, ships etc. are explicitly listed on a sanctions list. The rest are implied through narrative sanctions and sectoral sanctions that target specific sectors and activities.
There is also the 50% rule by OFAC and the EU, which means that a company is sanctioned (even if it doesn’t appear on any list) if an aggregate of 50% of its owners (whether people or companies) are sanctioned. This means that although you may not find a company explicitly listed on a sanctions list, you will also need to check its ownership chain (possibly even all the way up to the top) to be sure that it is not sanctioned by association because one or more of its owners are sanctioned. Read more about the sanctions 50% rule.
If you fall afoul of sanctions rules by doing business with a sanctioned counterpart you face penalties and fines. In some cases this could even mean jail time for you, if you are found to be responsible for the infringement.
Those bodies that enforce sanctions compliance take into consideration whether your sanctions processes are robust enough when deciding on a penalty. Having lax processes can increase the severity of penalties. That’s why having a thorough and consistent sanctions system in place helps protect your business as it is a mitigating factor when ascribing a penalty for a sanctions breach.
Here’s what OFAC says about this: “OFAC will also consider the existence, nature, and adequacy of a subject person’s risk-based OFAC compliance program at the time of the apparent violation, where relevant, among other factors.”
You probably already know that banks and financial service providers have to do sanctions screening. But did you know that those working in all these sectors may also need to have robust sanctions screening in place?
Approximately 75% of sanctions enforcement cases are against non-bank sectors, so sanctions screening is something many businesses need to consider.
What you’re doing is a really important job. With Russia’s war in Ukraine, sanctions have been in the news a lot lately, BUT your job has always been really important.
Although it may not always feel like it, sitting in an office in whichever city you are in, it’s all of this work done by analysts day in and day out that helps sanctions actually take effect.
Without you, sanctions would be a toothless tiger. Just by the fact that companies do sanctions screening makes it harder for the bad players to access the systems they need to thrive, and, of course, by finding a sanctioned counterpart, you can play a role in blocking their efforts.
It’s not just your company’s direct business relationships that you need to be aware of. In a rule referred to as “pass-through sanctions,” you may be held responsible if your customer or supplier is found doing business with a sanctioned country/entity/individual. Here are two examples of how “pass-through sanctions” work in real life:
It’s safest from a sanctions compliance point of view to have processes in place to be aware of the entire chain from your supplier’s suppliers to your customer’s customers.
To limit the risks to your business, you should use a tool that helps you check all of the major global sanctions lists easily. For example, no matter where you are in the world, checking OFAC, UN, EU and DFAT sanctions will help you avoid doing business with someone who is sanctioned somewhere in the world. Complytron’s sanctions screening tool does just this. Try it now for free.
Depending on your business, you may have tens of thousands of customers. Most will pass through screening without a problem, but sanctions screening is about finding that one in the sea of good ones that causes a problem.
As an analyst, it can sometimes make you question why you’re doing sanctions screening if everyone seems to pass. But don’t feel that it’s pointless: Each sanctions screen you do ensures you’re not missing that red flag that could pop up at any time.
Fines for sanctions non-compliance can reach several million dollars. Therefore you are better off investing in tools, like Complytron.
Investing in sanctions screening not only helps protect your business but could also be financially prudent in the long run. Besides, not all sanctions screening tools are expensive. Complytron is an affordable choice starting at just 0.0056 euro cents per search.
The individual’s name that you have on file may not be enough to catch someone. Check names they are “also known as” or “frequently known as” for different names and nicknames, for example, Osama bin Laden had about 15 different names registered against him when he appeared on sanctions lists.
Check different name orders as well because different countries have different naming conventions. Check different name spellings. Check the original non-Latin script, if relevant.
Check different dates of birth, for example, when Osama bin Laden was listed he had about six different birth dates registered as the exact date of birth is not always conclusively known. The same goes for place of birth or country of residence, check any alternatives you have on file.
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