Sanctions are legal restrictions imposed by governments or international bodies to pressure or punish countries, businesses, organisations, or individuals for violating specific laws or norms. It is essential to screen your customers against sanctions lists. This article will provide an overview of sanctions, who enforces them, different types of sanctions, who needs to comply with the sanctions regime, and how you can screen your customers against sanctions lists.
What are Sanctions?
Sanctions are restrictions imposed on individuals, organisations, or countries by governments or international bodies to enforce compliance with laws, norms, or policies. Sanctions can be economic, financial, trade, or diplomatic in nature, and they can have severe consequences for businesses that fail to comply. The goal of sanctions is to pressure or punish entities to change their behaviour or policies that violate international norms or laws.
Types of Sanctions
Sanctions can be broadly classified into three types: general sanctions, sectoral sanctions, and specific sanctions.
- General sanctions are comprehensive sanctions that restrict all trade and economic activity with the sanctioned country or region. They may also include travel bans and asset freezes. General sanctions are usually imposed in response to serious violations of international norms or laws, such as human rights abuses, nuclear proliferation, or support for terrorism.
- Sectoral sanctions target specific sectors of the economy, such as oil and gas, mining, or financial services. These sanctions are designed to limit the ability of the targeted sector to operate or access international markets while minimising the impact on the broader economy.
- Specific sanctions target individuals or entities that are involved in specific activities that violate international norms or laws, such as drug trafficking, arms proliferation, or supporting terrorism. These sanctions may include asset freezes, travel bans, or restrictions on financial transactions.
Who Enforces Sanctions?
Different countries and international organisations enforce sanctions, including the United Nations, the European Union, the United States, and Australia. These sanctions are enforced through various mechanisms, such as financial restrictions, trade embargoes, travel bans, and arms embargoes. Failure to comply with these sanctions can result in severe legal and financial consequences for businesses.
Examples of Different Sanctions Lists
There are various sanctions lists that businesses must comply with, depending on the country or region where they operate. Some examples of sanctions lists include:
- United Nations Security Council Sanctions List
- Australian Sanctions List (DFAT)
- United States Treasury Department's Office of Foreign Assets Control (OFAC) Sanctions List
- European Union Sanctions List
Who Needs to Comply with the Sanctions Regime?
All businesses that engage in international trade must comply with the sanctions regime. This includes businesses that export goods, provide financial services, or engage in any other activity that involves cross-border transactions. Compliance with sanctions is crucial to avoid legal and financial risks that can harm a business's reputation and bottom line.
How Can You Screen Your Customers Against Sanctions Lists?
Screening customers against sanctions lists involves checking the names of individuals or entities against the lists of sanctioned individuals or entities. Businesses can use software solutions to automate the process and ensure compliance. There are various software solutions available, including bronID.
How Can You Use bronID to Screen Your Customers Against Sanctions Lists?
bronID provides an automated sanctions screening solution that can help you screen your customers against a number of different lists. With bronID, you can easily integrate sanctions screening into your KYC (Know Your Customer) or KYB (Know Your Business) process, automating the screening process and ensuring compliance.
bronID's sanctions screening solution provides real-time screening against many sanctions lists, including the United Nations Security Council Sanctions List, the Australian Sanctions List, the United States Treasury Department's Office of Foreign Assets Control (OFAC) Sanctions List, and the European Union Sanctions List. This means that you can rest assured that your customers are being screened against a broad range of sanctions lists and you are complying with regulatory requirements.
In addition to automating the sanctions screening process during customer onboarding, bronID also provides ongoing customer due diligence (CDD) to ensure you remain compliant over time. By conducting ongoing sanctions screening, bronID can help you identify any changes to customer status that may trigger sanctions compliance requirements.