With the backdrop of recent geopolitical events, compliance teams supporting domestic businesses have taken notice.
Companies that work internationally, either through trade or by partnering with foreign suppliers and distributors, have to proactively manage risks related to foreign policy when making critical business decisions.
Of course, the most prominent example is the conflict between Russia and Ukraine, and its associated economic sanctions against Moscow, with the United States, the United Kingdom, the European Union and other countries banning or significantly constraining commerce with Russia. Sanctions have always been an element of geopolitics. In the past, we’ve seen similar actions against nations such as North Korea, Iran, and Cuba.
What does this mean for businesses operating domestically but working with third parties overseas, including potential customer (leads, contacts) as well as new partners and accounts? The geopolitical landscape is becoming more volatile, and the need to address sanctions risks is growing as a result. An important task for compliance departments today is performing accurate sanctions list screening to ensure that denied parties have not entered the business network.
A Rundown on Global Sanctions
A sanction functions as a legal ban or restriction on economic activity with another country, organization, or individual. Countries use sanctions in order to enforce foreign policy or influence global politics. Such actions can range from mere threats to tangible bans aimed at weakening a target country through economic warfare.
Sanctions additionally ban the flow of economic assets, which can range from anything like:
- Trade; and
Companies that have partners overseas must manage international trade and its associated regulations. Sanctions specifically prevent or restrict domestic businesses from interacting with banned individuals and companies.
Global sanctions screening is the business practice of cross-checking people within the corporate network against denied parties lists. Doing so keeps you compliant with global trade regulations and prevents you from working with restricted parties, who are often barred because they engage in dangerous or corrupt practices.
Defending Against Non-Compliance with a Global Sanctions Search
Discovering a violation of trade sanctions in your business is one of the last situations you want to find yourself in. The penalties are immense and can range from costly fines to even criminal charges. Not to mention the image and reputation hit, which may make it harder to find new customers and business partners in the future when you have such a blemish on your record.
The purpose of a sanctions list screening program is to check whether any customers, employees, business partners, leads, contacts or accounts are restricted according to government sanctions lists. As geopolitical pressures have ramped up over the years, performing global sanctions search and denied party screening now requires more of your attention to get done right. The general steps involved are as follows.
Check Which Sanctions Lists Apply to You
Because there’s no central database for all denied parties, it’s up to the business itself to make sure that its global sanctions search list is complete. These may include:
- Export Compliance watchlists from the departments of State and Commerce names entities around the world, as well as on U.S. home soil, that companies cannot enter into business transactions because of national security concerns.
- Sanctions Program maintained by the Department of the Treasury for handling financial transactions across the border with national security goals in mind.
- The List of Excluded Individuals and Entities from the Office of the Inspector General, an agency that determines which corporate entities are allowed to participate in federally funded healthcare programs based on their previous activity and quality of work.
- The System for Awards Management of the General Services Administration with a similar healthcare compliance exclusion database.
- The Foreign Corrupt Practices Act designed to prevent bribery of foreign governments and officials by domestic organizations.
- The Drug Enforcement Administration responsible for the Controlled Substances Act and any enforcement actions the government implements in that regard.
These are just some that businesses need to be aware of in the United States. But there are others from around the world including the European Union and United Kingdom. Sanctions can apply to all businesses regardless of their size or market, though certain industries like healthcare and finance come under more scrutiny and as such have more sanctions lists to screen against.
Screen Leads, Contacts, and Accounts Thoroughly
The internal network of an organization expands whenever new entities are added in, ranging from individuals to entire companies:
- New employees are onboarded.
- The procurement team adds a new active supplier.
- Sales chooses a new distributor to operate in a foreign country.
In all these cases, denied party screening must be conducted to avoid any compliance risks. In fact, screening should be conducted regularly since denied parties lists often change without prior notice.
Just make sure that you’re working with the most up-to-date copy of the sanctions lists. The Office of Inspector General recommends a global sanctions screening frequency of at least once a month for this reason.
How Software Can Help
Software-based sanctions list screening solutions have risen in response to geopolitical demands and the mounting complexity of corporate compliance. In such an escalating risk landscape, wouldn’t it be helpful to have a global sanctions screening platform that guarantees your global sanctions search is being conducted with the latest iteration of every sanction list in addition to automated screening features as new employees, partnerships, leads, and contacts are added?
Manual denied party screening is a heavy weight sitting on the shoulders of today’s companies. The best way to scale up and ensure that you can achieve and maintain optimal compliance is to adopt these software solutions.
Take a company like Movella for example. In response to inefficient and slow manual screening processes, the 3D motion tracking firm chose to automate denied party screening through Salesforce sanctions screening, a solution that integrated the screening functionality directly into its customer relationship management platform.
Address Geopolitical Change head-on with Descartes Salesforce Sanctions Screening solution
Considering the rapidly shifting geopolitical context and increased enforcement actions, compliance professionals are facing heightened anxiety around accidentally working with a restricted or denied party, as even a single violation has enormous impact on their organization. You can take the proactive approach and optimize your sanctions list screening process with technology like Descartes’ Salesforce Sanctions Screening solution that not only streamline the process but make it scalable, efficient and thorough.
Services like Descartes are available to integrate screening functionality directly into CRM and ERP platforms like Salesforce, which already contain information on leads, contact, accounts and other important company data that should be screened frequently. There’s no better time than now to see what solutions like Descartes can do to help you navigate complicated global sanctions screening functions amidst a dynamic geopolitical environment. Strengthen your global sanctions search system and stay ahead of your compliance requirements.
Read our white paper to get more detailed information about Performing Effective and Comprehensive Denied Party Screening Within the Salesforce CRM or visit our Salesforce screening resource center.