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When we talk about trade in the international market and dealing with finances, it is extremely important for institutions to stick to the sanctions regulations. The size of your business does not matter, be it a small business or an MNC, understanding the Finite Sanctions List Screening is important to stay safe from lawful problems and damage to reputation. But the problem is that no matter how good the intention of your business is, you can still get into blunders.
1. Neglecting Regular Updates on Sanctions Checklist
One of the biggest mistakes an organization can make in Finite Sanctions List Screening is not being able to keep up to date with changes to the sanctions checklist. Sanctions lists keep changing much of the time because of geopolitical shifts or changes in policies. When businesses do not refresh their sanctions screening system they end up neglecting some sanctioned entities that have been newly added, this can leave your business at a risk of non-compliance.
2. Overlooking Entity Matching Accuracy
When matches are made with the sanctions lists in the sanctions screening process, accuracy must be taken care of. If an organization depends on exact name matches it can result in false negatives, where the actual sanctioned entities bypass detection as there are changes in spellings. Therefore, businesses should make use of advanced identities that can increase the efficacy of sanctions checks.
3. Lack of Geographical Understanding
Another very common mistake is not taking into consideration the nuances of geological sanctions. Sanctions are different from one place to another therefore, almost every region has different regulations. When a business does not keep this in mind, they can violate the sanctions regulations of some other region and fail to eliminate risks.
4. Inadequate Screening Coverage
Complete coverage is also important in Finite Sanctions List Screening. Depending only on one sanctions list or one source for screening can leave some stones unturned as almost all authorities have their own sanctions lists. By using a multi-source approach and cross checking data from various sources can increase the coverage of your sanctions screening process.
5. Failure to Screen Third Parties
Businesses at many times only screen their own partners and not the third parties which puts them at a risk of facing unforeseen threats. Even your suppliers or distributors might work with sanctioned entities and help them make transactions through you. This can lead to breaches of compliance and bring lots of harm to reputation. By screening third parties, businesses can protect themselves from such threats.
6. Insufficient Due Diligence Processes
Sanctions screening is not complete without performing due diligence. Clearing your customers to the next step while onboarding them or approving transactions without performing due diligence also increases the chances of ignoring warnings or unusual activities. By making use of EDD, risks can be easily eliminated to a huge extent.
7. Failure to Document Compliance Efforts
Documentation is very important when it comes to complying and following regulations surrounding sanctions. When a business does not maintain clear and accurate records of its sanctions screening, its results and decisions taken, it reduces its ability to show that they have been using due diligence practices in case an audit or investigation takes place.
8. Lack of Employee Training and Awareness
Errors made by humans are a weakness in sanctions screening processes. When your team is not trained enough and has weak areas, they might overlook some important compliance practices or interpret them wrong. Therefore you must give them proper awareness and provide training so they can improve the culture of compliance in your organizations and help in eliminating risks related to sanctions.
9. Over Reliance on Automated Systems
Even though human errors are a thing, still no matter how much you automate and streamline your processes you will always need the human eye. This is because humans can look into things more deeply and identify problems, saving you from complacency. The automated screening devices might miss risk chances or might not adjust to arising dangers. Therefore, automated systems can be made better when combined with the expertise of humans.
10. Failure to Adapt to Evolving Threats
Regulations surrounding sanctions keep changing as they are impacted by international changes and risks. When businesses do not change and update their sanctions screening practices from time to time, they are unable to adapt to regulatory needs. This leaves them weak in front of compliance breaches. Therefore, you must analyze your screening systems and update them while staying knowledgeable of industry best practices.
Make the Most Out Of Finite Sanctions List Screening!
All in all, Finite Sanctions List Screening is an extremely important part of compliance when it comes to trading on an international level. By avoiding the mistakes we listed above and adapting to the best practices in the industry, you can improve your business’s sanctions screening efforts and get rid of risks while maintaining your reputation. AML Watcher has access to over 60,000+ databases and offers 90% process automation. So, use our sanctions screening services now!
