Sanctions Screening: Challenges grow and grow


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With the rising challenges of sanctions screening, there must be some days when Compliance professionals must want to cry “Uncle.” As the stakes for mistakes get higher and higher, the environment gets more and more complex. But the right approach to sanctions screening can accommodate that complexity.

The geopolitical entanglements with Iran are a perfect example, and so are the efforts of the Mexican drug cartels to embed their money-laundering operations deeply into front businesses.

We wrote about the pending nuclear deal with Iran earlier this week and how potential changes require advance preparation by Compliance professionals. That was driven home in an article in the Wall Street Journal yesterday. The Journal reported on a speech by Adam Szubin, the acting undersecretary of Treasury for terrorist and financial intelligence.

Szubin emphasized that the nuclear deal will not affect the terror-related sanctions. He provided as examples Bank Saderat and Mahan Air, which he described as subsidiaries of the Revolutionary Guards. Still, other analysts predict that a thawing related to the nuclear agreement will boost the boldness of other countries in easing trade restrictions and that the overall environment related to Iran will continue to shift in various ways, even as U.S. terror sanctions remain in tact.

These shifting realities pop up again and again. New drug cartels in Mexico are sprouting up as some of the old powerhouse cartels experience setbacks in their war with government forces. A recent Journal report focused on the New Generation cartel in the Mexican state of Jalisco and their front businesses such as a sushi restaurant, a tequila producer, a hotel, a cab company, an advertising company, and so on. OFAC has added these businesses to the sanctions list, but others will no doubt replace them.

A Solution: UBOs, CDD, and Embedded Sanctions Screening

That is part of the challenge of sanctions screening and the importance of the identification of Ultimate Beneficial Owners and an integrated AML software solution, according to AML Partners CEO Frank Cummings.

“It’s clear that you can’t just go by what’s on the list,” Cummings said. “You have to go to the beneficial owner. This means you can’t have a disjointed process where your screening process is separate from your onboarding process.”

“One of the keys is to have a software solution that includes the UBO process in your CDD onboarding—and that simultaneously integrates your screening software with your CDD application,” Cummings said. “This is a prime example where your software tools need to rise to the challenges of a complex sanctions screening reality. Not only is this effective, but it’s also efficient—and that’s crucial for Compliance officers in this high-stakes environment.”

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