Sanctions Screening

I. Answer the questions:

1. How does sanctions screening help international organizations?
2. What are reference data screening and transactional screening?
3. How can companies make sanctions screening as efficient and accurate as possible?
4. What sanction screening lists do you use when making client reviews?

Sanctions play a big role in the global scene with ongoing geopolitical tensions and financial crime. Different
governments and institutions like the European Union (EU), Office of Foreign Assets Control (OFAC), and
the United Nations (UN) have introduced sanctions against entities, countries, individuals, or other parties
that have been involved in, or are suspected of, illegal activities. As a result, organizations with international
operations need to be more aware of sanctions to comply with the latest developments. This means that
they need to review their own financial data and business partners on a regular basis to detect and prevent
potential violations. Sanctions screening helps organizations minimize risk, comply with regulations, and
identify unwanted business counterparties to prevent any unwanted business activities.

What is sanctions screening?

Sanctions screening is a measure used to detect and prevent financial crime, helping companies to
minimize financial risk exposure. More technically, it compares an organization’s own records against data
lists to see if there are any similarities, which would indicate that records include sanctioned parties that you
want to avoid doing business with.

One of the main reasons for organizations to adopt sanctions screening is to comply with local or
international jurisdictions as well as to minimize risk by identifying harmful business counterparties early on.

What are sanctions lists?

Sanctions lists compile data on sanctioned parties such as states, individuals, groups, countries, and legal
entities. By screening your reference or transactional data against sanctions lists, you can detect unwanted
business parties and prevent doing business with them.

When company records show similarities to sanctions lists, they are flagged and marked for further
analysis.

What type of data is screened against?

Reference data screening collects data on business partners, related connections, employees, third-party
service providers or vendors, recipients of donations or sponsorship, or international securities identification
numbers and compares it with sanctions lists.

Compliance: Some regulatory bodies and financial institutions require sanctions screening to stay
compliant. It depends on the jurisdictions where the organization is located and what kind of regulations
apply. In some cases, firms can receive significant penalties or fines for not being compliant.
 Risk: Sanctions can pose financial risks for companies when current business partners or customers are
suddenly sanctioned. Moreover, by using sanctions screening, firms can lower their risk because it enables
them to detect and prevent sanctioned parties whom they should not do business with.

Fraud: Sanctions screening can help you detect fraudulent transactions when sanctions lists include
fraudulent counterparty data that show similarities. Sometimes companies also use private blacklists that
include sanctioned beneficiaries suspected of fraud.

Anti-Money Laundering (AML): In some jurisdictions, organizations must follow AML obligations that
require them to screen current and potential customers. By scanning against sanctions lists, politically
exposed persons, and other data, you stay compliant with the AML obligations.

Countering Financing Terrorism (CFT): CFT obligations often go hand in hand with AML. It requires
organizations to do sanctions screening to avoid the financing of terrorism. Failing to do so can lead to
penalties in some jurisdictions.

Sanctions screening best practices

To conclude, there are a few best practices that you can consider to make sanctions screening as efficient
and accurate as possible. They will also help you minimize sanctions risks.
1. Check which sanctions screening regulations are enforced in your jurisdictions and make sure to comply
with them.

2. Remember to do run regular sanctions screening to keep up to date with the latest changes including the
most recently added sanctioned parties.

3. Do both reference data screening and transactional screening to ensure both business partners and
transactional counterparties are safe to do business with.

4. Ensure your data formats match the sanctions screening lists to ascertain a smooth screening process and
a reliable outcome. This will also lessen the number of false positives that you need to analyze.

5. Screen your data against known lists with reliable tools that can guarantee to deliver the desired results.

6. Do not forget to analyze flagged screening results and follow up with them to ensure the right steps are
taken.

7. Wherever possible, try to consolidate data and screening processes to save time and resources. The more
systems you use the more complicated it becomes.

8. Leverage automation tools for sanctions screening that screen on a regular basis or whenever payments
are executed. This way you can avoid working with manual data inputs and screening results analyses that
are time-consuming.
II. Match the words from the text with their corresponding definitions:

1. exposure (n) a 7. jurisdiction (n) b

2. leverage (v) i 8. fraudulent (adj) k
3. ascertain (v) j 9. screening (n) c
4. counter (v) e 10. violation (n) d
5. go hand in hand (ph.v) f 11. compile (v) h
6. compliant (adj) g

a. the risk of losing money, for example through a loan or investment, or the amount of money that might be lost
b. the authority of a court or official organization to make decisions and judgments
c. a test or examination to discover if there is anything wrong with someone
d. an action that breaks or acts against something, especially a law, agreement, principle, or something that
should be treated with respect
e. to react to something with an opposing opinion or action, or to defend yourself against something
f. closely related to it and happens at the same time as it or as a result of it
g. used to describe something that obeys a particular rule or law
h. to collect information from different places and arrange it in a book, report, or list
i. to use something that you already have in order to achieve something new or better
j. to discover a fact; to make certain of something
k. dishonest and illegal

III. Complete the table with the appropriate word form (verb, noun or adjective)

verb noun adjective

exposure
leverage
certain
violated
counter
comply
fraud
compile
screening