Importance of Sanctions compliance
Sanctions Lists screenings are required as part of Anti-Money Laundering (AML) and Counter Terrorist Financing (CTF) compliance. The Financial Action Task Force (FATF) requires that Sanctions Lists screenings be completed when onboarding customers and establishing a new business relationship. Failure to complete the screenings or following Know Your Customer (KYC) requirements will result in expensive fines and sanctions.
Especially for FinTech / InsureTech and other startups, Sanctions Lists compliance might be a confusing territory. Aside from setting up a reliable AML process, even to decide on which lists to focus on first is not an easy task. Generally it is good advice to obey any Sanctions Lists from any jurisdictions the company is doing business in. For most companies focusing on the US and European markets, at least the following Sanctions Lists should be taken into consideration:
Most important Sanctions Lists in the EU, UK, US and Canada
European Union – External Action (EU):
Consolidated list of sanctions (CFSP)
Article 215 of the Treaty on the Functioning of the European Union (TFEU) provides a legal basis for the interruption or reduction, in part or completely, of the Union’s economic and financial relations with one or more third countries, where such restrictive measures are necessary to achieve the objectives of the Common Foreign and Security Policy (CFSP).
In Union law Regulations are directly applicable in all EU Member States.
United Kingdom (UK)
Office of Financial Sanctions Implementation – HM Treasury (UK):
Consolidated list of targets (HMT)
The Office of Financial Sanctions Implementation is responsible for the implementation and administration of international financial sanctions in effect in the UK.
US Department of Commerce – Bureau of Industry and Security (BIS):
Denied Persons List (DPL)
Export Privileges are denied by written order of the Department of Commerce. Each order affecting export privileges is published in the Federal Register. These orders are the official source of information about denied persons and are controlling if there is an inconsistency with anything on this list or elsewhere on this Web site. The Federal Register from 1998 to the present is available on the Government Printing Office Access Web site. Prior to 1998, you may need to consult the printed version or other on-line source of the Federal Register.
Unverified List (UL)
Parties listed on the Unverified List (UVL) are ineligible to receive items subject to the Export Administration Regulations (EAR) by means of a license exception. In addition, exporters must file an Automated Export System record for all exports to parties listed on the UVL and obtain a statement from such parties prior to exporting, reexporting, or transferring to such parties any item subject to the EAR which is not subject to a license requirement. Restrictions on exports, reexports and transfers (in-country) to persons listed on the UVL are set forth in Section 744.15 of the EAR. The Unverified List is set forth in Supplement No. 6 to Part 744 of the EAR.
Entity List (EL)
The Export Administration Regulations (EAR) contain a list of names of certain foreign persons – including businesses, research institutions, government and private organizations, individuals, and other types of legal persons – that are subject to specific license requirements for the export, reexport and/or transfer (in-country) of specified items. These persons comprise the Entity List, which is found in Supplement No. 4 to Part 744 of the EAR.
US Department of State – Bureau of International Security and Non-proliferation:
Nonproliferation Sanctions (ISN)
The United States imposes sanctions under various legal authorities against foreign individuals, private entities, and governments that engage in proliferation activities. Announcements of such sanctions determinations are printed in the Federal Register and can be accessed through the Government Printing Office web page.
Department of State – Directorate of Defense Trade Controls:
ITAR Debarred (DTC)
The persons (including entities and individuals) in this list are subject to “statutory debarment” pursuant to §38(g)(4) of the AECA and §127.7 of the International Traffic in Arms Regulations (ITAR). Thus, these persons are prohibited from participating directly or indirectly in the export of defense articles (including technical data) and defense services.
Department of the Treasury – Office of Foreign Assets Control (OFAC):
Specially Designated Nationals List (SDN)
OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Their assets are blocked and U.S. persons are generally prohibited from dealing with them.
Foreign Sanctions Evaders List (FSE)
OFAC publishes a list of foreign individuals and entities determined to have violated, attempted to violate, conspired to violate, or caused a violation of U.S. sanctions on Syria or Iran. It also lists foreign persons who have facilitated deceptive transactions for or on behalf of persons subject to U.S. sanctions. Collectively, such individuals and companies are called “Foreign Sanctions Evaders” or “FSEs.” Transactions by U.S. persons or within the United States involving FSEs are prohibited.
Sectoral Sanctions Identifications List (SSI)
OFAC publishes a list to identify persons operating in sectors of the Russian economy identified by the Secretary of the Treasury pursuant to Executive Order 13662. Directives found within the list describe prohibitions on dealings with the persons identified (transacting in, providing financing for, or dealing in debt with a maturity of longer than 90 days).
Non-SDN Palestinian Legislative Council List (PLC)
Section (b) of General License 4 issued pursuant to the Global Terrorism Sanctions Regulations (31 C.F.R. Part 594), the Terrorism Sanctions Regulations (31 C.F.R. Part 595), and the Foreign Terrorist Organizations Sanctions Regulations (31 C.F.R. Part 597) authorizes U.S. financial institutions to reject transactions with members of the Palestinian Legislative Council (PLC) who were elected to the PLC on the party slate of Hamas, or any other Foreign Terrorist Organization (FTO), Specially Designated Terrorist (SDT), or Specially Designated Global Terrorist (SDGT), provided that any such individuals are not named on OFAC’s list of Specially Designated Nationals and Blocked Persons (SDN List).
Foreign Financial Institutions Subject to Part 561 (561)
Foreign financial Institutions that are subject to sanctions, certain prohibitions, or strict conditions before a U.S. company may do business with them.
Non-SDN Iranian Sanctions Act List (NS-ISA)
The ISA List includes persons determined to have made certain investments in Iran’s energy sector or to have engaged in certain activities relating to Iran’s refined petroleum sector. Their names do not appear on the Specially Designated Nationals or Blocked Persons (SDN) List, and their property and/or interests in property are not blocked, pursuant to this action.
Listed Persons under the Special Economic Measures Act
When sanctions are imposed under Canada’s Special Economic Measures Act, the names of any listed persons (both individuals and entities) are set out in a schedule to the relevant regulations. Where regulations include more than one schedule, the prohibitions may apply selectively. Names may be added to or removed from a list by amending the regulations.
Listed Persons under the Justice for Victims of Corrupt Foreign Officials Act
When sanctions are imposed under Canada’s Justice for Victims of Corrupt Foreign Officials Act, the names of any listed persons (both individuals and entities) are published in a schedule to the relevant regulation. Names may be added to or removed from a list by an amending regulation.
Consolidated Canadian Autonomous Sanctions List
The Consolidated Canadian Autonomous Sanctions List includes the names of any listed persons (both individuals and entities) in the schedules of regulations made under the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act.
The inclusion of these names on this list is for administrative purposes and ease of reference only. The consolidated list is not a regulation, and it does not have force of law. In addition, the prohibitions may not apply to each individual or entity in the same way. Each applicable sanctions regulation specifies what prohibitions apply to a particular individual or entity. For accurate information on which provisions apply, reference must be made to the relevant regulation in which the particular individual or entity is listed.
Consolidated United Nations Security Council Sanctions List (UN):
Consolidated United Nations Security Council Sanctions List (UN)
The Consolidated Sanctions List includes all individuals and entities subject to sanctions measures imposed by the Security Council.
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