
The ‘What’, ‘How’ and ‘Why’ of Sanctions Screening | A Basic Guide

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International collaboration and cross-border transactions have become the norm in our interconnected digital world. This has made compliance with regulatory frameworks and global sanctions more critical. As supply chains and financial systems have become more complex, they have become susceptible to exploitation by scammers with illicit intentions. The rising number of Anti-Money Laundering (AML) violations highlights the significance of sanction screening solutions in this digital age.
Sanctions are the preventive measures governments enact on countries, businesses, and individuals to mitigate the risk of crimes by such parties. Sanctions are imposed on individuals and their organisations suspected of being involved in money laundering, terrorism financing, drug trafficking, and countries violating human rights. Sanctions ensure that high-risk customers can not continue their illicit activities within their country and across the globe. These measures include diplomatic sanctions, financial sanctions, and military sanctions.
Sanctions lists comprise countries, firms and individuals with greater risk of money laundering and fraud. The entities appear on sanctions lists because of their history of being involved in illegal activity. Several lists are available to identify these criminals, including international sanctions lists from the EU, the UK, the UN and the US.
Financial institutions and other businesses must perform sanction list screening on their new customers. The screening serves as a warning to reject a new client during onboarding or to conduct Enhanced Due Diligence (EDD) if the customer is allowed to onboard.
Governmental bodies that control sanctions around the globe include the United Nations Security Council (UNSC) for the UN, the Office of Foreign Assets Control (OFAC) in the US, the European Union External Action Service (EEAS) in the EU, and Her Majesty’s Treasury (HM Treasury) in the UK.
All financial firms must fulfil sanctions screening requirements to comply with Know Your Customer (KYC) and AML regulations. Every financial service company must have a programme to perform robust sanctions screening.
The programme should include:
Sanctions screening is required to prevent illicit activities that wreak havoc on businesses and customers. It is legally binding in many countries, such as the US, Canada, the UK, and the EU. Failure to adhere to sanctions regulations results in legal, financial, and reputational risks for the organisations. Non-compliance includes fines and, in severe cases, leads to criminal charges and loss of company’s licences.
At Shufti Pro, we are dedicated to offering AI-powered sanctions screening services tailored to our customer’s unique needs. With our robust AML screening solution, we help businesses mitigate the risk of fraud whilst achieving regulatory compliance.
Here’s what makes our AML compliance solution stand out:
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