Sanctions Screening Automation: Top Tips

Let's first look at what is sanctions screening automation.

What Is Sanctions Screening Automation?

Sanctions screening automation is part of the broader regulation technology (RegTech) umbrella. But what exactly is RegTech? It's the technology - increasingly incorporating AI and machine learning - that helps companies and organizations meet their compliance obligations in a world that is transforming digitally. 

And a critical facet of the rapidly growing RegTech arena is the automation of sanctions screening. It allows companies and organizations to set up automatic processes that alert businesses when clients and other stakeholders appear on global sanctions lists. 

The automation manifests itself in a few ways. For example, transactions in real-time can connect to global sanctions databases through a developer-friendly API (as offered by sanctions.io). Automated batch screening, performed at specific intervals, is also part of the solution.

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Why Are Companies Increasingly Requiring Sanctions Screening Automation?

There are several reasons why companies worldwide increasingly require automated sanctions screening solutions. We'll examine them in a moment.

But first, some background. Since the 2022 Russian invasion of Ukraine, the number of sanctions implemented by global sanctioning bodies, such as the US's Office of Foreign Assets Control (OFAC) and the UK's Office of Financial Sanctions Implementation (OFSI), has increased significantly. 

And not only have they increased - the sanctions landscape is becoming more complex, as have the laws and penalties for failing to keep up. 

And one tangible consequence of this change in the status quo is painful headaches for professionals with sanctions compliance responsibilities. In a nutshell, they need all the help they can get (as do the companies who employ them).

But what are these problems? Here are some of them:

• Complying with the increasing number of sanctions laws
• Financial penalties for non-compliance
• Reputational damage for working with sanctioned parties
• Money laundering and other financial crime risks
• Environment, social and governance (ESG) requirements
  

Fortunately, automated sanctions screening services assist businesses and organizations with all of the above challenges and risks. And moving from inefficient manual processes to streamlined, automated ones also has the following upsides for your business or organization:

• Enhanced sanctions screening efficiency
• Heightened sanctions compliance
• Improved accuracy in identifying sanctions violations risks
• Compliance cost savings (less manual processes)
  

And the bottom line is this: With all these benefits - enabled by the advancements in RegTech - it's easy to understand why companies and organizations are increasingly seeking sanctions screening automation solutions. 

Recommended reading: sanctions.io's Ultimate Sanctions Screening Guide.

What Types of Companies Use Sanctions Screening Automation Services?

We now know why sanctions screening automation is growing so fast. But what kinds of companies are driving this growth?

Number 1: The Financial Sector

Let's first focus on the primary source of its rise: The financial sector. If you are a FinTech startup, an expanding payment processor, or any company offering financial services, you will be acutely aware of the following:

Failure to perform sanctions screening on customers and stakeholders (non-compliance) can lead to civil and criminal penalties in almost all jurisdictions worldwide.

Most countries have this legislation because they adopt the Financial Action Task Force's (FATF) sanctions screening recommendations for financial services. The FATF is, of course, the intergovernmental global money laundering and terrorist financing watchdog. 

But why are automated processes so important? 

For large financial institutions, the answer to this is obvious. Automation is the most effective way to scale sanctions screening processes across numerous jurisdictions and thousands of stakeholders worldwide. 

However, many of you reading this may be from startups and mid-size businesses offering financial products and services (as are many of sanctions.io clients). For companies in this stage, sanctions screening automation has a unique selling point: The ability to spend less time getting bogged down on compliance and more time developing your core product and winning customers. 

Number 2: All Companies Are Finding Value in Automated Sanctions Screening

It's not only sectors with legal requirements to perform sanctions checks (such as banking and insurance) driving the growth of automated screening.

As part of the broader Know Your Customer (KYC) process, companies and organizations from a wide range of sectors, with no legal requirement to perform sanctions checks, also find tremendous value in sanctions screening automation.

But how so?

Because the reality is this: All legal entities (including individuals such as private citizens) leave themselves open to prosecution if financial relationships with sanctioned parties occur. 

There may be no requirement by law to have sanctions screening in place. However, prosecution is possible if law enforcement agencies discover business dealings with sanctioned individuals or parties.

And we can put it another way: If your business uses currencies such as dollars, pounds, and euros in your operations, you must comply with the sanctions issued by sanctioning bodies from the UN, the US, the UK, and the EU to avoid the risk of getting into a legal quagmire (here are two companies with these issues in 2023)

And again, why is the automation of the sanctions screening process attractive?

To answer this question, we can think of it like this. In 2023 with the incredible advances in regulation technology,  businesses of all sizes, from bootstrapped startups to SMEs, can easily set up cost-effective sanctions screening automation processes.

Part of the attraction is how it's become so easy to get started - which is what we will discuss next.

Recommended Reading: Startups & SMEs Must Pay Attention to Sanctions Violations Too (Plus Insights from 2023 Fines)

Automating Sanctions Screening Is Easy to Get Started

One of the most significant perceptions of sanctions screening automation is that it takes time to set up. Also, because of its expense, only financial institutions with bottomless pits of money can afford it. But here is good news. In the last few years, the barriers to entry are coming down fast because of technological strides. 

Let's expand on both points. 

Time to Set Up: Implementing automated sanctions screening processes (especially for startups and SMEs) is now as easy as setting up many other essential business processes. Think about the cloud-based SaaS services your business utilizes (e.g., marketing automation and recurring billing). Sanctions screening is now in the same bracket - lean more in sanctions.io's implementation guide.

Cost: Automated sanctions screening services are now available to all businesses and organizations, regardless of size. How does 2000 API calls for $299 sound? That's right, for that low price (full disclosure, they are sanctions.io's July 2023 prices), your business can screen that amount of customers and stakeholders against global sanctions lists - plus PEP and criminal watchlists - through intelligent APIs that are no-/low-code friendly.

How sanctions.io Can Support Your Business With Sanctions Screening Automation

To learn more about how our sanctions, PEP, and criminal watchlist screening service works and to receive answers to all your queries regarding the sanctions.io API, integrations, and more. Book a free Discovery Call now. 

7-Day Free Trial (No Credit Card Required)

We offer a free 7-day trial (no credit card is required) and will be delighted to walk you through our service. sanctions.io is a highly reliable and cost-effective solution for sanction checking. AI-powered and with an enterprise-grade API with 99.99% uptime are reasons why customers globally trust us with their sanctions screening needs.