What is a Sanctions List?

A sanctions list is a record that is typically published online of the countries, regimes, groups, and individuals who are currently subject to sanctions. It is a requirement for every citizen and business to comply with sanctions, and screening against sanctions lists from applicable sanctioning bodies is one way to ensure due diligence is observed.

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Before explaining more, it’s useful to keep in mind this definition of what sanctions are to understand why sanctions lists are so important:

“Sanctions are measures taken by countries to restrict trade and official contact with a country that has broken international law.”

In relation to sanctions that affect the financial sector, financial sanctions prohibit transactions and, in some cases, any financial services with the target.  

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Typically, financial sanctions are penalties placed against individuals or groups (known as the ‘target’) known to be engaging in behaviours that are not only illegal but constitute a threat to the international community. The label of ‘target’ can refer to an array of entities, including:

• Countries and their regimes
• Organisations  
• Individuals
• Ships and aircraft

Illegal or threatening behaviour that can lead to financial sanctions include:

• Terrorism
• Money laundering
• Trafficking of drugs, weapons or humans
• Engagement in the proliferation of weapons of mass destruction

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There are a multitude of sanctions lists published around the world for the purpose of sanctions screening. These are typically free to access online although many businesses choose to use a data supplier. This ensures a single source of high quality and accurate sanctions data for regular, automatic screening.  

Sanctions lists are created and published by sanctioning bodies, including sovereign states, regional unions and international organisations. These include:

• United Nations Security Council  
• European Union
• HM Treasury – UK  
• Office of Foreign Assets Controls (OFAC) – US
• Financial Crimes Enforcement Network (FinCEN) – US
• Monetary Authority of Singapore (MAS)
• Department of Foreign Affairs and Trade (DFAT) – Australia
• World Bank Group and many more.

Updates to sanctions lists are made daily but the lists do not always contain the same information, which can complicate the screening process. A consolidated view of global sanctions lists can therefore improve efficiencies and help organisations avoid missing any sanctions in their screening process.

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Sanctions lists are integral to sanctions screening. The basic principle is fairly simple: compare all data you have relating to the customer, supplier, employee or transaction, with the data contained in the relevant external sanctions lists. To mitigate risk, sanctions screening should not only be conducted at the beginning of a new relationship but on a regular basis.

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The process of screening as a legal requirement can often depend on where a company is headquartered and trades, as well as other factors including its partnerships and alliances.

For example, for companies with headquarters in the UK, screening against the Consolidated List of Financial Sanctions Targets is mandatory. For those with headquarters in the EU, it’s mandatory to screen against the Consolidated Financial Sanctions List. Screening against some sanctions lists, like the World Bank Listing of Ineligible Firms and Individuals, is done at a company’s discretion.

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It is a regulatory requirement for businesses to carry out effective sanctions screening with adequate controls in place. Screening should not only be on customers but on their associates, beneficial owners and the extended supply chain.  

Yet, with sanctions lists constantly changing, multiple sanctioning bodies which each have their own lists, and the nature and consequences of sanctions becoming increasingly complex, managing sanctions risk is ever more challenging.  

The need for effective sanctions list management, coupled with reliable sanctions screening systems, is paramount. All too often, inadequate screening systems and technology are the cause of many challenges in AML and anti-financial crime compliance.

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Working with market-leading data providers of sanctions lists, Napier offers two screening solutions to revolutionise the sanctions screening process by minimising false positives, improving efficiencies, and protecting organisations from costly penalties:

1. Client screening

Is an existing or new customer subject to sanctions? Napier’s Client Screening system screens customer names against sanctions lists to identify sanctioned individuals or entities.

2. Transaction screening

Is the transaction going to or coming from a sanctioned entity? Napier’s Transaction Screening system screens all parties involved in the transaction/payment in real time and against multiple financial sanctions watch lists, as well as other sanctions lists.