To help mitigate the risk of transacting with a designated person or entity or otherwise breaching sanctions, institutions should implement a screening process for both customers and payments. These processes should be tailored to the institution’s risk profile.
With respect to customer screening, new customers should be screened against relevant sanctions lists, such as the US List of Specially Designated Nationals and Blocked Persons (SDN) List and UK’s Office of Financial Sanctions Implementation’s (OFSI) consolidated list and the French Treasury’s consolidated list, before they are onboarded. Existing customers should also be screened when customer details or sanctions lists are updated. If a customer is a corporation, directors and beneficial owners should be screened. Any potential matches should be reviewed by appropriately trained staff. If the match is confirmed, any funds held for the customer should be frozen and a report should be made to OFAC, OFSI, the French Treasury, or the Italian Ministry of Foreign Affairs and International Cooperation and the Italian Financial Intelligence Unit, as appropriate.
Payment instructions should likewise be screened against relevant sanctions lists and in the event of a match, the instruction should not be executed. Again, a report should be made to OFAC, OFSI, the French Treasury, or the Italian Ministry of Foreign Affairs and International Cooperation and the Italian Financial Intelligence Unit, as appropriate.
It will also be important to conduct risk-based, customer due diligence, as screening against sanctions lists may not always identify sanctions risks, such as the risks associated with the customer’s business (e.g., exporting sanctioned goods to Iran).