Key Sanction Risk Areas

Financial institutions are usually the ones who suffer the most risk and compliance issues from possibly sanctioned clients. Many sanctioned entities use discrete methods to shield their true identities. This helps them go undetected by sanction screening lists and watchlists. Many financial institutions and companies dealing with foreign entities have taken to using sanction screening lists to detect illicit actors. However, the entities in sanctioned jurisdictions use innovative ways to make sure that they are able to carry out their normal trading and financial activities despite the sanctions on them.

It is very important for financial institutions to background-check all of their clients. This is to make sure they are not inadvertently dealing with sanctioned entities. Breaching sanctions can be a very serious offense, even if it is unintentional. Unintentionally breaching sanctions can be chalked down to a company being negligent in its screening and checking procedures. Hence, all companies must comply with local and international sanctions to prevent facing heavy fines or prosecution.

How to apply sanctions due diligence to different lines of business