Today’s headlines are full of news about current and evolving sanctions – but what are they and how could they affect your organization?
What is a sanction?
A sanction is a political or economic measure often implemented by governments and international bodies to influence the behavior of a regime, group, or individual. These can include actions like travel bans, asset freezes, import/export restrictions, and more. They’re meant to protect national security and a country’s economy.
Sanctions are typically targeted against individuals or groups known to be engaging in illegal or threatening behavior. These targets include:
Counter Narcotics Trafficking
Foreign Interference in Elections
Human Rights Abuses
A financial sanction prohibits transactions and, sometimes, any financial services involving the targeted entity.
Who creates sanctions?
Some of the most common authorities in the matter include:
The UN Security Council
The European Union
The UK Parliament
The US President
The US Secretary of the Treasury
The list of sanctions grows every day, and the different ruling bodies don’t always agree. This makes it more complex than ever to manage sanctions risk.
Who should screen for sanctions?
All businesses in all industries must comply with sanctions screening requirements. In the past, the financial services sector has experienced more enforcement, but other sectors – like charities and non-governmental organizations – have started to see penalties and gain attention.
With this clear trend of enforcement against organizations outside traditional banking and finance sectors, any company that conducts business across borders needs to have a rigorous sanctions risk mitigation strategy process in place.
How do sanctions screenings work?
Sanctions screening involves screening individuals, groups, or companies against customized sanction lists according to the territories where your organization trades, the currencies they trade in, and their partnerships and alliances.
This may include manually putting a name into an online search tool, checking a customer database for any sanctions alerts, or automatically screening customer and stakeholder databases regularly.