Sanctions involve a wide range of measures—from asset freezes to trade embargoes—to exact pressure on individuals, organizations, and nation states to meet international and national standards of conduct. What’s more, the number of sanctions regimes continues to grow, further complicating on-going risk management.
The costs of inadequate sanctions screenings are significant, including potential reputational damage, substantial fines, and exclusion from future business contracts.
How to create an effective sanction screening process
Keeping sanctions, watchlists and politically exposed persons (PEPs) on your company’s radar demands a proactive approach. Here are 10 best practices to follow when implementing sanction checks:
- Take a top-down approach by building a culture of compliance from the Board and C-suite to managers and employees.
- Maintain up-to-date policies and procedures that evolve with the entire sanctions environment, from UN Security Council sanctions to those implemented by the United States.
- Clearly communicate these policies and procedures to employees and any third parties operating on behalf of your organization.
- Actively train employees and third-party agents to ensure they understand sanctions compliance obligations, as well as how to recognize and address sanctions compliance.
- Implement a risk-based sanction screening process tailored to the specific nature, size, and risk of your business operations.
- Align sanction screening to third-party due diligence procedures including consistent, sanction, watch list and PEP checks during due diligence and through ongoing risk monitoring.
- Ensure procedures include escalation contacts, both for sanction enquiries and violation reporting.
- Audit and regularly review sanction screening policies, procedures, and training to ensure your processes keep pace with change.
- Reinforce policies and procedures with independent audits and testing.
- Don’t wait for an enforcement action to put these best practices in place.
Download our factsheet with detailed explanations of these best practices.
What more information? Download our Sanctions Risk Checklist.