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Sanctions Checks

What is a financial sanction?

A financial sanction is a legal restriction, usually implemented in order to limit or ban trading by specific individuals, organisations and even whole countries, who have committed financial crime or misconduct. 

As outlined by the Office of Financial Sanctions Implementation, there are three different types of financial sanction in the UK. These are defined as ‘targeted asset freezes’‘restrictions on a wide variety of financial markets and services’ and the most punitive,  ‘directions to cease all business’

sanctions check is the term used to describe the process of searching sanctions lists for your potential client or customer, to make sure that they do not have any historic or current financial sanctions levied against them. A global sanctions check is the most thorough kind available; this type of screening utilises sanctions lists all over the world. For example, SmartSearch uses the Dow Jones WatchList to carry out sanctions checks – this database is comprised of 1,100 different public and private lists sourced internationally. 

Who imposes sanctions in the UK?    

Any financial sanctions which are imposed by the United Nations must be implemented by the countries they are relevant to – they can use Resolutions passed by the UN Security Council to do this.

The European Union must also implement all financial sanctions which are imposed by the UN, but the EU can impose its own financial sanctions on member states too, including the UK.

The United Kingdom has some measures in place to ensure that EU and UN sanctions are adhered to. According the OFSI, there are regulations which will ‘impose penalties for breaches of EU regulations’.  In some circumstances, the UK also has the capacity to impose its own domestic sanctions, under legislation like the Sanctions and Anti-Money Laundering Act 2018, or the Anti-Terrorism, Crime and Security Act 2001.  

Sanction Screening and AML Compliance

Screening sanctions lists for your potential customer or client is an important element of AML compliance, and your company’s risk-based approach. This is because it is illegal to do business with an individual, corporation or country that has been sanctioned, if that business breaks the terms of the restrictions in place against them.

There are some exceptions to this law, but even in these instances you need a license to work with anyone who has been sanctioned. Whether your dealings with a sanctioned customer are conscious or not, they increase how vulnerable your business is to financial crimes like money laundering.

SmartSearch Sanctions Checks

Even if you do have access to all the sanctions lists required to do a thorough screening, carrying out these checks manually is a time-consuming, inefficient process, with no guarantee that you won’t miss something.

SmartSearch’s sophisticated platform carries out an automated screening for sanctions as part of a series of comprehensive AML checks. Using the Dow Jones WatchList, which is comprised of 1,100 different databases worldwide, we can find a match for your potential customer or client, even if they’re registered with a nickname or an abbreviation. We weed out the false positives too, so you won’t waste time carrying out due diligence on the wrong individual.

Speak to an AML and compliance expert today to discover more.