In brief
Sanctions list screening is checking business partners against official sanctions lists in order to rule out prohibited transactions with listed persons.
Contents
What is Sanctions list screening?
The EU and other states maintain lists of persons, companies and organisations against which financial and economic sanctions have been imposed. In the EU, a prohibition on making funds available applies to listed parties: no funds or economic resources may be made available to them, either directly or indirectly. This also covers ordinary deliveries of spare parts, regardless of whether the goods themselves are subject to export control.
Customers, suppliers, consignees, parties involved in payment and often service providers are screened, both when they are first set up and regularly during the business relationship, because the lists change frequently. In the EU, the basis is the relevant sanctions regulations; consolidated lists are made publicly available. Depending on the transaction, lists of other states, such as the United States or the United Kingdom, may also be relevant. Many companies use software that finds names even when they are spelt differently.
Sanctions list screening is one building block of export control, alongside item classification, country checks and end-use checks. In individual cases, the binding information is that of the competent authorities, such as the Federal Office for Economic Affairs and Export Control (BAFA), German customs or the Deutsche Bundesbank; this entry does not constitute legal advice.
In practice: maintenance and procurement
Document every screening with the date, the list used and the result, even if there is no match. In the event of a possible match, stop the transaction, verify the identity using further attributes and, if doubts remain, involve the competent authority.
Synonyms and abbreviations: sanctions screening · denied party screening · restricted party screening · embargo check · watchlist screening
Frequently asked questions
Who has to carry out sanctions list screening?
EU sanctions prohibitions apply to all companies and persons within their scope, not only to exporters. Distributors, service providers and companies doing business purely within Europe are also not permitted to make economic resources available to listed persons. The law does not prescribe in detail how screening is to be organised; a documented, risk-based process is customary.
How often should business partners be screened against sanctions lists?
At a minimum when a business partner is first set up and before every transaction with increased risk. Because sanctions lists are amended frequently, many companies additionally screen their entire partner base regularly or automatically whenever a list changes. The appropriate frequency depends on industry, destination countries and business volume and should be laid down in the internal compliance programme.
What should be done in the event of a sanctions list match?
First, the transaction is put on hold. It is then checked whether it really is the same person or company, for example using address, date of birth or registration number. If the match is confirmed, the transaction must not be carried out. For the further procedure and any reporting obligations, the competent authorities or specialist advisers should be consulted.