4 Components of Modern Sanctions Screening Tools

Success in a globalized economy is often rewarded with an increasingly complex landscape of rules, regulations and compliance pitfalls. While such challenges were once the exclusive domain of finance, nearly every industry today finds itself touched by strict requirements to ensure that all transactions and business relationships are vetted against numerous federal watch lists and state regulations.

Sanctions screening is particularly challenging for fast-growing or acquisitive businesses as well as mature organizations that have experienced rapid growth in the past.

Want additional insight into sanctions challenges? Download our white paper to learn the most critical screening areas of a risk-based sanctions compliance program.

What are Sanctions Screening Tools?

Banks, credit unions, money services businesses, insurance companies and organizations in other industries are required to meet federal regulations that mandate how customers are treated, who they trade with and more. Failure to meet federal regulations like these can result in civil and criminal penalties, leading to costly fines.

Sanctions screening software helps businesses comply with relevant regulations, including OFAC, USA PATRIOT Act, FinCEN, Gramm-Leach-Bliley Act, BSA/AML and many more. These tools help organizations detect and prevent financial crime and mitigate strategic risk across the entire enterprise. The screening process involves checking individuals, companies and organizations against sanctions lists. And as lists evolve and sanctions become more complex, organizations need a comprehensive sanctions compliance platform that automates screening.

Sanctions Screening Challenges from Fragmented Business Operations

For rapidly growing companies, compliance may involve multiple disparate departments that rely on siloed business applications encompassing multiple customer and vendor datasets. Oftentimes, separate departments and business functions cannot—or do not—communicate, making effective risk management even harder due to the lack of shared data or even a lack of attention to compliance at all. And with each new business function comes a new set of regulatory requirements and the associated risks.

What’s more, newer businesses that have grown quickly may not even be aware that new goods or services offered require screening against watch lists associated with the Office of Foreign Assets Control, the USA PATRIOT Act or the U.S. Treasury Department—in addition to any state regulations that may exist.

For these businesses, a fractured internal compliance process is likely to lead to inefficiency, increased risk and the inability to meaningfully analyze compliance.

Instead, a more holistic view should be the goal: an automated compliance solution that seamlessly integrates sanctions screening into their existing technology ecosystem. Such a solution should allow a consistent and comprehensive review system regardless of business function silos and provide a central system of record to ensure data retention and accessibility.

Businesses should avoid a fragmented approach to compliance by deploying an automated solution that seamlessly integrates sanctions screening into their existing technology ecosystem.

4 Components of a Modern Sanctions Screening Platform

Businesses should have high expectations from modern sanctions screening software, including these four components:

1. Real-Time Protection

As business functions grow and transactions become more sophisticated, increasing importance will be put on real-time transactional screening as a preventative solution, in addition to retroactive screening. Such a system would have the ability to stop a transaction at the point of sale, which is particularly important for businesses that rely on shipping and transport to deliver a product or service. 

2. Automated Retroactive Screening

At the same time, retroactive transactional screening remains an integral compliance function for many businesses. Various federal watch lists are updated regularly, requiring the rescreening of transactions at scale. An effective retroactive compliance system should automate re-screening immediately upon receiving watch list updates. Anything less could lead to sanctions problems, or even violations, down the road.

3. Centralized, Accessible Records

A modern sanctions screening system must provide a centralized system of record that is accessible across multiple, disparate functions. Such a system should allow for ease of analysis on a holistic level, as well as provide executive, legal and individual compliance departments the ability to access and analyze records through a portal or on their existing systems.

4. Highly Customizable

Given the risk management variables among industries and businesses, a sanctions screening solution should be highly customizable to meet the end-user’s specific needs. A solution should be agile so as not to burden clients with bundled services that are irrelevant to their industry or specific requirements.

For organizations across all industries, the regulatory landscape is a quickly changing web that presents challenges for ambitious businesses. So, as a company grows, so does its risk. To keep up, sanctions screening must evolve alongside business needs in a way that allows a customized, seamless and holistic sanctions screening process.

Modernize Your Approach to Sanctions Screening

If compliance mandates aren’t met, a successful business that fails to employ an agile, holistic sanctions screening process may find itself hampered by its very own success. Implementing a modern, automated screening platform helps businesses overcome common compliance challenges and increase operational efficiencies.

Learn more about remaining compliant with evolving sanctions requirements by downloading our white paper.

Get your copy

Get In Touch

Are you looking for the edge to outperform the competition? CSI is a full-service technology and compliance partner.

Let’s talk