Sanctions Screening Programme and how you can effectively manage Sanctions risk

Sanctions screening, according to the Wolfsberg Sanctions Screening Guidance 2019, is a control employed within Financial Institutions (FI’s) to detect, prevent and manage sanctions risk. Screening should be undertaken as part of an effective Financial Crime Compliance (FCC) programme, to assist with the identification of sanctioned individuals and organisations. It helps identify areas of potential sanctions concern and assists in making appropriately compliant risk decisions.

Fundamental pillars of a FCC programme, are the following:

Policies and Procedures - defining requirements for what must be screened, in what context and at which frequency, and how alerts should be adjudicated, paying particular attention on how to resolve alerts where information is unavailable, incomplete or potentially unreliable.

Risk Assessment - applying risk based decisions to resolve specific questions of what data attributes to screen, when to screen, what lists to use and how to set the screening filter. The risk factors taken into account while conducting the risk assessment are:

-The jurisdictions where the FI is located, and its proximity to sanctioned countries

-What customers the FI has – international or domestic, where those customers are located and what business they undertake

-The volume of transactions and distribution channels

-What products and services the FI offers and whether those products represent a heightened sanctions risk, for example, cross-border transactions, foreign correspondent accounts, trade related products or payable-through accounts

Internal Controls - implementing screening control processes requires an understanding of the various methodologies and technologies available and their operational consequences.

Testing - conducted to validate that the screening system is performing as expected and to assess its effectiveness in managing the specific risks articulated in the FI’s Risk Assessment.