Sanction Screening – A Blueprint for Business Success

Whether you are a goal driven global enterprise or an amateur business who loves to explore the global business dynamics, the so called economic and compliance ecosystem calls you to opt for a rigorous sanction list screening. Assuming we all are aware of the term sanctions and those imposing regulatory bodies obligating every business under their territory to comply with the restrictions, the need of the hour is to highlight how sanctions check-list screening is the ultimate key to thrive your business in the global community.

Staying compliant to ever-changing sanctions regulations across the world, the implementation of robust tools and solutions such as sanction list screening software which are capable of delivering credible outcomes has become crucial. The objective of this blog is enabling you to build a strong narrative on how sanctioned list check can impact your business not only in terms of hefty fines and other legal penalties but also because the integrity and due diligence of your institution can be under threat.

Meeting Sanctions Compliance: A New Challenge for Institutions

Amid Russia and Ukraine conflict, sanctions compliance and regulations has become even more complicated impacting the investment opportunities along with many other things. To already imposed sanctions and global sanction lists maintained by the OFAC (US Office of Foreign Assets Control) and the SDN (Specially Designated Nationals and Blocked Persons) lists, in 2022, the jurisdictions of UK and EU have made more additions to SDN lists. These ever-increasing regulations have posed a big challenge for institutions to meet compliance, making the screening practices doubtful. Where the list-based sanctions allows the institutions to prohibit business with sanctioned entities instead of the whole region or countries, it poses measurable challenges against the identification of entities present in the targeted lists such as name matching and screening against those who fulfills the 50% rule of OFAC. In the sanctions regime, whether your business is under the compliance of OFAC or FCA (Financial Conduct Authority) in the UK, mitigation of sanctions compliance risks makes it mandatory for your institution to have a solid automated sanction list screening solution.

Failure to Sanctions Compliance: Grave Shortcomings

Regretting the failure to comply against US sanctions, Royal Bank of Scotland was charged $100 million for trespassing the sanctions against Cuba, Burma, Sudan, and Iran in 2010, as reported by World Finance. Upon investigating, DFS (Department of Financial Services) found that RBS convicted staff concealed the identity of clients while facilitating the transactions and routed $523 million to the sanctioned entities.

A non-compliance to sanctions, secretly facilitating around 60,000 transactions with Iran (US sanctioned country), Standard Chartered Bank was allegedly charged with $674 million fine. The transactions worth $250 billion were made through falsifying the payment directions and replacing the sanctioned clients data with false information, reported by BBC.

In other news, BBC reported that British American Tobacco was fined $635 million against the US sanctions violation imposed on North Korea. The tobacco company was found defrauding the FIs (Financial Institutions) to facilitate the transactions and got charged with the largest sanction penalty against North Korea sanctions compliance.

The enforcement of sanctions list screening and sanctions compliance by OFAC (US Department of Treasury’s Office of Foreign Assets Control (OFAC) resurfaced the sanctions violations by daVinci (Swift Prepaid Solutions. Inc). The financial payment company enabled the reward cards which were redeemed by those present in sanctioned jurisdictions such as Iran, Cuba, Syria, and Crimea. The OFAC came to a settlement with daVinci for $206,213 and obligated the convicted firm to employ a robust compliance program, reported by the Global Trade and Sanctions Laws.

Business Loss and Integrity Fall: Case Study

Globally recognized crypto exchange company, Binance saw a major drop in its trading spot after the firm was found guilty of willingly trespassing the sanctions and anti-money laundering compliance. Having a large reserve of BNB tokens worth $2.8 billion, the exchange company lost the value of tokens and witnessed more than 8% fall. After years of investigation, the CEO of Binance stepped down from his position and pleaded guilty which led to an outflow of $1 billion excluding bitcoins.

Increased Compliance and Scrutiny: A Price for Non-Compliance

Other than paying a $4.3 billion settlement amount, one of the largest penalties the US obtained, stated by US Attorney General Marrick Garland, Binance not only lost reputation and a fair share of market value but has also been put under tight compliance scrutiny. Held against three different criminals charges which were violation of Emergency Economic Powers Act and conspiracy and conduction of money transfer with no license available. The non-compliant sanction practices predisposed the largest crypto exchange to the strict regulations aligning with US sanctions and anti-money laundering standards along with the obligation of employing a robust sanction monitoring program.

Crucial Business Prospects: Implementation of Screening Protocols

In-practice screening protocols and the chances of undermining compliance standards are intertwined. In the ever-changing financial atmosphere and compliance regulations, the adoption of an automated sanctions list screening system has become more than crucial for the success of your business, especially if you are operating the global market. Let’s take a brief look on how a consolidated sanction screening solution can be the blueprint of your business success.

Transforming the Leadership in Business Ethics

Implementing a screening solution to meet sanctions compliance enables your business to transform into a moral leadership. The hefty non-compliance charges against Standard Chartered and Royal Bank of Scotland pushed organizations to take unavoidable screening measures and become an ethical leader in the unforgiving economic sphere.

Redefined Partnership and Trust within Businesses

With active and rigorous compliance and sanction screening solution in-practice, your business promotes a healthy partnership within the global market. Well written policies and screening protocols on fancy papers are not equal to the implementation of compliance measures and thus fail to protect your business from legal penalties and loss of trust from customers. Binance facing a major outflow of money from its market is the real time example of our narration, highlighting the need of evolving and game-changing screening measures.

Combating Financial Crimes through Innovation

Exposing SWIFT to cyber attack, the cyber criminal actors heisted the central bank of Bangladesh in an attempt to steal $ 1 billion, in Feb 2016, published by IMF. Breaching the anti-cybercrime tools and protocols, this heist generated an alarm for the global businesses to not underestimate the vitality of screening measures. In a world where no one is sure who is going to protect the system, the reputational and compliance cost is the key motivation for your business to take timely measures against compliance risks.

Economics of Sanction Screening and Cost Optimization

Explaining the cost optimization of financial institutions (FIs), especially banks, it costs a large bank $135K to $270K annually to train an employee who is capable of executing financial crime management and sanction check-list screening. Raising concern on sanction screening in a white paper, it is highlighted that the rise in inflation and rarity in desired skill sets has made it even costly, as observed in recent years. In a broader aspect, the annual cost of any big financial institution in managing a task force against financial crimes screening can get as high as $12 million to $29 million. In order to strengthen the screening protocols, the big FIs tend to consider cost optimization measures and screening tools with balanced economics unlike the smaller financial or non-financial institutions who commonly opt for manual screening with fragile control, increased false positives, and more vulnerability to screening breaches. The alarming complexities in sanctions regulations and the cost of combating measures has made the implementation of an automated sanctions list screening solution, a paramount need of the hour for all institutions.

Abolish Screening Gaps with AML Watcher

The ultimate need of your business is to thrive in the global market while not compromising the compliance standards, the question is not about if but of when and how you can meet the ever-increasing sanctions trends and regulations. AML Watcher with its automated sanctions list screening solution enables your business to keep a perfect pace within the evolving sanction landscape.

One Consolidated Solution against Expanding Sanctions Compliance

With its real time monitoring and extensive coverage of autonomous sanctions list, AML Watcher sanction screening allows you to assess sanction compliance risks with millions of sanctioned entities, more than 235 countries coverage, and a solicited reliable date from  more than 200 Comprehensive and Domestic Sanctions Regimes. The updated multi-jurisdictional data of 235+ countries leverage your business screening protocol and equipping it with up-to-date global sanctions lists.

Enhanced Resilience in Compliance with AML/CFT Regulations

AML Watcher with its sophisticated network analysis tools, secondary matching capabilities, and proprietary entity linking technology helps your business in abiding legal jeopardies and loss of license by promptly detecting targeted sanctions imposed on specific entities including persons, companies, organizations, countries, ships, and aircrafts listed on global, regional, and domestic sanctions data index. With a promised redefined and enhanced resilience against compliance breaches, our sanction list screening solution enables your business meeting strict adherence to AML/CFT regulatory frameworks.

Traverse the ever-changing sanctions trends and landscapes with AML Watcher and contact us to build breach-proof sanctions compliance while thriving in the global business market.