Currently, there are approximately 250 watchlists in 195+ nations worldwide for regulated financial and non-financial institutions to monitor individuals and entities. The watchlists continuously change and update various formats, languages, and data structures. The blog discusses major sanctioning bodies that comprise nations, unions, and international bodies, each mentioning their distinct sanctions list, which does not always align with one another.

Sanctions List Monitoring

At present, the most renowned and powerful sanctions are those professed by the European Union (EU), Office of Foreign Asset Control (OFAC), United Nations Security Council (UNSC), and Her Majesty’s Treasury (HMT). Regulated and obliged entities must consider multiple watchlists to comply with comprehensive industry and region-specific sanctions screening guidelines. Sanctions list or AML watchlist is a multi-source ML-TF potential risk compiling of banned individuals or entities, regulatory and due diligence listings for the regulated financial and non-financial institutions. All the Consolidated Lists mentioned below get continually updated. Hence the firms and financial entities are required to operate sanctions screening solutions to remain AML-CFT compliant.

The U.S. Office Of Foreign Assets Control (OFAC) Sanctions List

Administered by the U.S. Department of Treasury (DoT), the OFAC sanctions list aims at the worldwide individuals and entities that raise potential threats to the security and integrity of the United States.

The OFAC Specially Designated Nationals List (SDN) is the most sought-after global watchlist encapsulating “individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries” and terrorists and drug traffickers of the non-targeted countries; the second one is the Consolidated Sanctions List (CSL) comprising non-SDN data sources.

The European Union (EU) Sanctions List

The EU sanctions list is part of a comprehensive EU Common Foreign and Security Policy (CFSP). Similar to other sanctions, economic and trade restrictions exist on individuals, businesses, governments, and external groups. The European Union states must comply with the EU sanctions policies to jointly and effectively combat money laundering and terrorism threats.

Office of Financial Sanctions Implementation (OFSI), UK sanctions list

THE OFSI regulations apply to all business entities and financial institutions, either located or established in the U.K. The United Kingdom’s financial sanctions list, a division of Her Majesty’s (HM)Treasury, OFSI, mentions sanctioned investments and freezing of assets. The Office of Financial Sanctions imposes sanctions and checks on AML Compliance for businesses and organizations.

Canada Sanctions

The United Nations Act (UNA), the Special Economic Measures Act (SEMA), and the Justice for Victims of Corrupt Foreign Officials Act (JVCFOA) are the three main acts under which the Canadian government can impose sanctions. To check on the Politically Exposed Persons (PEPs) connected to corruption practices, there is a special Freezing Assets of Corrupt Foreign Officials Act enforced by the government.

United Nations Sanctions

United Nations Security Council (UNSC) imposed sanctions is a consolidated watchlist of individuals and entities followed by regulated and obliged entities worldwide. United Nations sanctions include freezing assets, market access restrictions, travel bans, trade embargoes of specific products, etc. The UN sanctions are listed for both individuals and entities. The UN sanctions are the most important financial sanctions, and global industries must comply with them. There are countries and groups on the UN sanctions list, including Afghanistan, Central Africa, The Republic of the Democratic Republic of the Congo, Democratic People’s Republic of Korea, Iran, ISIL and Al-Qaida, Libya, Mali, Somalia, Sudan, and Yemen.

Why a Sanction Screening Software is Important

A sanctions screening software performs real-time batch screening, identity checks, and transaction monitoring. It simultaneously performs regulatory checks to produce a comprehensive AML-CFT report. In an end-to-end AML sanctions screening software, there are other important Interpol sanctions, Politically Exposed Persons (PEPs) watchlists from the security commission, and specific reputation plus negative news checks such as Adverse Media screening.

IDMerit’s IDMaml solutions assure frictionless sanctions screening against unverified AML reports that may result in reputational damage to your business and losing valuable customers affecting your bottom line. We offer a complete AML watchlist and sanctions screening guidelines to global financial and non-financial businesses.

For client onboarding, transaction monitoring, sanctions screening, and KYC solutions contact the IDMerit AML watchlist expert today.

The post Essential AML Watchlist and Sanctions Screening Guidelines to Combat the Global ML-TF Threats appeared first on IDMERIT.

Contents

1. Why is Transaction Monitoring Important?
2. AML Transaction Monitoring – The Flow of Events
3. Transaction Monitoring Software in Today’s Digital Milieu
4. FATF Recommendation Mentions of SARs and STRs
5. Red-Flag Generation Via Machine Learning Algorithms
6. Potential Transaction Monitoring Red-Flags
7. Transaction Monitoring and Client Screening Solutions

Why is Transaction Monitoring Important?

With an increasing number of touchless payment methods overwhelming the market, risks and financial crime experts are on the go with introducing extra vigilant AML methods of risk mitigation. As a result, AML-CFT compliances like KYC, due diligence, Sanctions screening, and Transaction Monitoring have emerged as inevitably important compliance standards. In addition, there are regulatory penalties for AML non-compliance, and filing suspicious reports is a crucial part of fulfilling AML obligations.

An end-to-end Transaction Monitoring solution analyses client transactional activities and matches them with their historical data and onboarding profile to determine the risk levels. In this blog, we will discuss why Transaction Monitoring has become the need of the hour and various peripheries involving transaction tracking and reporting suspicious activities to avert serious money laundering and terrorism crimes. 

AML Transaction Monitoring – The Flow of Events 

• Transaction Monitoring fulfills the AML-CFT, KYC, and due diligence requirements of the financial and obligatory non-financial institutions. 
• It’s an ideal AML system that monitors the transaction patterns of businesses on rule-based, preset scenario models.
• The engine generates an alarm every time an activity trespasses a rule. 
• The Transaction Monitoring analyst then scrutinizes the transaction pattern, generating a Suspicious Transaction Report (STR) or Suspicious Activity Report (SAR). 
• The SARs and STRs are then filed with the respective state’s Financial Intelligence Unit (FIU), which takes necessary actions to determine whether there is a threat. 

Transaction Monitoring Software in Today’s Digital Milieu

An effective Transaction Monitoring Solution must protect all financial and non-financial institutions using non-face-to-face methods for client onboarding and payments. Banks, money service businesses (MSBs), payment gateways and processors, legal, accounts, property agents, and insurance fall under this ambit.

For banks and financial institutions, Transaction Monitoring covers cash payments, deposits, withdrawals, ACH payments, wire transfers, currency exchange, credit extensions, UPI modes, and national and international payments. In addition, with an increasing number of Virtual Assets Service Providers (VASPs), suspicious transfer monitoring calls for both fiat and cryptocurrency modes of payments.

FATF Recommendation Mentions of SARs and STRs

Transaction Monitoring, also known as Client Screening, is an inevitable responsibility that any obligatory business must accomplish to meet national and international regulations. The Financial Action Task Force (FATF), in its 20^th Recommendation, describes the importance of the Suspicious Activity Report (SAR) and the Suspicious Transaction Report (STR) as part of suspicious report filings related to Transaction Monitoring. The FATF mentions instant SAR and STR filings from regulated institutions to FIUs and financial authorities.

Any delay in SAR and STR filings may invite threats to the AML-CFT safety standards of the enterprise and the state. Therefore, irrespective of the scale of the transaction, the institutes must report all untoward transactional incidents without delay to deter grave money laundering or terrorism financing threats. Therefore, in number IV of the FATF CFT Recommendation IX, reporting suspicious transactions related to terrorism has been made compulsory for financial firms.

Red-Flag Generation Via Machine Learning Algorithms 

A comprehensive Transaction Monitoring system scans the financial activities in real-time; hence any suspicious behavioral patterns breaking the preset rule and scenario model are tracked/caught in real-time. For example, suspicious money transfers, unexpected inflow or outgoing cash, vague foreign payments, uneven business profits, etc., raise automated AML alerts.

There are rule-based prehistorical datasets and scenario models, and the engine is mostly customized to suit business-asset monitoring requirements. An AML Transaction Monitoring system also provides legislative solutions and screens the clients against sanctions, embargos, blacklists, and other watchlist data sources.

Potential Transaction Monitoring Red-Flags 

• Payment transactions exceeding preset thresholds within the system
• Transaction frequency over a particular period 
• Uncanny behavioral pattern, sudden inflows or outflows of payments 
• Transactions made with people, organizations, and nations are mentioned in the OFAC, HMRC, UN, EU, or other Sanctions lists.
• Transactions unmatching with the client product, onboarding profile, and historical data
• Client showing a high risk on the current Adverse Media updates 
• Business relations with high-risk countries
• Politically Exposed Persons (PEPs) are prone to money laundering and corruption owing to their powerful positions. Transactions to and fro PEPs are subject to tightened scrutiny. 

Today, most financial and other regulated firms rely on Artificial Intelligence (AI) based Transaction Monitoring systems on combating money laundering and terrorism financing. Machine Learning powered AI algorithms determine suspicious transaction patterns by screening bulk data within seconds. Alarms are generated whenever the system detects anomalies in the activity patterns. False positives are continuously sifted in the patterns to figure out the final red flags considered to be crimes and to be filed as SARs and STRs. 

Transaction Monitoring and Client Screening Solutions

IDMerit extends IDMaml & IDMkyX

An all-inclusive Transaction Monitoring mitigates money laundering risks related to fraud, terrorism financing, funding weapons of mass destruction, drug trafficking, bribery, corruption, and identity theft.

IDMerit’s state-of-art AML Compliance Program IDMaml offers broad-spectrum Transaction Monitoring Solutions to businesses that require mass-onboarding and big-scale transaction tracking solutions. Avail customizable Transaction Monitoring solutions, set your own dynamic rules and red-flag scenarios, and test them in our sandbox environment.

You may also book a demo for our premium IDMkyX product AML-KYC range of solutions and avail yourself of complete customized, end-to-end AML-KYC and Transaction Due Diligence solutions for your business.

The post The Importance of Transaction Monitoring and SAR-STR Filing for Anti-Money Laundering Compliances appeared first on IDMERIT.

For those that viewed the American reaction tame, this is not the only time sanctions have been viewed as pointless or even counterproductive. And from a business perspective, sanctions list screening is probably seen as just another unnecessary cost on a business already plagued by pandemic problems. As much as you want to avoid hefty anti-money laundering (AML) compliance fines, you also don’t want the hassle of alienating paying customers.

Why Do You Need Sanction List Screening?

Since sanctions are usually done against an entire country, you may be thinking it’s easier to just not do business with anyone from the country. In one aspect, you may be right. However, sanctions don’t just include the physical country and world leader. It can encompass anyone who has done business with the country, individuals and businesses from the sanctioned country, past and present, and related individuals and entities.

In the case of Russia alone, that list before the 2022 sanctions, contained 735 sanctions for Crimea, approximately 170 for malicious cyber activity, and 37 for evading United Nations (UN) sanctions. This is from the United States alone and it doesn’t include UN sanctions or the current 2022 sanctions nor does it list exactly who is sanctioned. A little hint, Vladimir Putin isn’t the only name on the list.

That list extends into thousands of names of individuals and corporate entities that are not even based in Russia. Think about it in terms of your own business. Are you aware of every person your suppliers and distributors come into contact with? And what are they doing with your goods or money? Well, you should be and this is what sanction list screening does.

It is part of an in-depth risk assessment on individuals who are flagged in your customer onboarding process during Know Your Customer (KYC) verification. As part of enhanced due diligence, sanction list screening assists in identifying all the people you should not be doing business with due to the sanctions or ban on trade with these individuals and entities. Non-compliance can lead to fines, criminal charges, and you and your company ending up on a sanction list.

Unless you have gold or foreign currency reserves like Russia and China, sanctions are gonna seriously damage your company’s financial capabilities and business reputation. Because, even though you may not currently be aware of who is on every sanction list, we at IDMERIT, are aware if YOU made the list and so will all our clients and regulatory bodies. Therefore considering sanction list screening as unnecessary can cost you your business and put you among some very scrutinized companies right now.

Who to Look For in Sanction List Screening?

Performing sanction list screening should always be left to experts. There is no way for this to be manually done in a feasible time frame for effective customer onboarding or complete sanction checks. Plus, there is the added concern of regulatory reporting and digital identity security. This means you would have to know what type of people to look for on the list and what to do with the information collected.

Though the Office of Foreign Assets Control (OFAC) and the UN Security Council provides access to updated consolidated sanction lists, they don’t help you search nor do they identify relatives and close associates. In the case of OFAC, it only tells you which country and what rank of risk the person is. It’s left up to you to correctly identify this individual or entity before you start the process. Checking individual sanction lists would prove to be tedious and provide too many loopholes for misidentification and incorrect sanction list screening.

Now that the crazy dream of manual sanction list screening is out of the way, let’s identify the people you need to look for and the major sanction lists your screening process should include.

Politically Exposed Persons (PEP)

Politically Exposed Persons are easiest to identify as they are the people you see representing various government leaders, agencies, and their close family and friends. According to the Financial Action Task Force (FATF), PEPs are any individual who has been placed in a prominent public position by a domestic or foreign country. Once you hold any political office or have political influence you will remain on that list.

Since those positions are susceptible to AML offenses such as bribery and corruption, the FATF Recommendations require the application of additional AML compliance and Counter-Terrorism Financing (CTF) measures for business relationships with PEPs. These requirements are preventive (not criminal) in nature, and should not be interpreted as meaning that all PEPs are involved in criminal activity. This is why PEP sanctions lists with individual names and companies are not blasted across mainstream media.

Specially Designated Nationals (SDN)

Specially Designated Nationals and Blocked Person Lists consist of key persons and corporations that are associated economically or personally with the sanctioned country. Businesses and individuals are strictly prohibited from doing business with identified SDNs. Whereas PEP sanctions are not always restrictive, SDNs can ruin your business.

The reach of a single corporation could span the globe and without proper global ID verification during your KYC verification process. You wouldn’t know where to start in your PEP and sanction checks screening. This is why manual or DIY sanction list screening during KYC verification could land you on the SDN list yourself. Only an expert, automated KYC process with accurate PEP and sanction checks can prevent SDNs from being onboarded.

Adverse Media Watchlist

Being on an adverse media watchlist may not be as business-shattering as being an SDN. However, it depends on why you are on the list. Reasons for being on an adverse media watchlist can range from a simple office romance scandal to embezzlement or even high-stakes criminal charges. With an adverse media watchlist, that ‘why’ matters a lot.

This means participants on the list can be potentially damaging directly or indirectly to your business. Therefore stringent customer due diligence should always be considered during customer onboarding. Since there will likely be adverse media reports on individuals on PEP sanctions lists, there has to be consideration of factors beyond your scope. Hence the reasoning behind implementing an independent PEP screening process.

Checklist for PEP Screening Process

To start, don’t just screen for PEPs, but have access to as many sanction lists as possible. But even before that, you have to ensure your Customer Identification Program (CIP) is designed with enhanced due diligence to cater to a high-risk PEP screening process. Without proper ID validation systems, your PEP and sanctions checks will be off to a bad start.
Therefore to begin, you need an automated KYC verification process that provides widespread global ID verification in seconds. This means paying special attention to B2B customer onboarding and identity verification of Ultimate Beneficial Owners (UBOs). Global ID verification should also be part of Know Your Customer’s Client (KYCC) screening to catch potential associated threats.
Aside from global ID verification, your customers should also have a frictionless customer onboarding experience. The PEP screening process should not deter potential customers but have real-time identity verification with automated ID validation systems and digital identity security. Customers should have route options in completing the KYC verification process while still achieving AML compliance certification.
A major part of sanction list screening is of course the sanction list. There are numerous sanction lists across the globe. Some are governed by respective countries while others are part of consolidated group efforts of various government agencies, leaders, and even non-governmental organizations.

• Key Global Sanction Lists
• OFAC Consolidated Sanction Lists
• United Kingdom’s HM Treasury Sanctions
• UN Security Council Consolidated Lists
• European Union consolidated Sanction List
• Australia’s Department of Foreign Affairs and Trade (DFAT)
• North Atlantic Treaty Organization (NATO)
• Canada’s Office of the Superintendent of Financial Institutions Anti-terrorism Financing List
• European Union’s External Action Service (EEAS) Consolidated List
• Ukraine’s SDFM Terror List
• US Central Intelligence Agency (CIA) World Leaders Pep List
• World Presidents PEP List
• Council of Europe (CoE) Parliamentary Assembly PEP List
• Every Politician PEP List
• Switzerland Consolidated List
• Interpol Wanted List
• Turkish Terror Wanted List
• Interpol Yellow Wanted List
• Interpol UN Wanted List

Wanted lists were included because part of the global effort against money laundering is counter-terrorism financing. PEP and sanctions checks are only the beginning of the PEP screening process. Ongoing behavior monitoring and regulatory reporting is the next step in a continuous cycle of customer due diligence to retain AML compliance certification.

Sanction List Screening Goes Beyond AML Compliance

Your business’s AML compliance certification isn’t the only thing you are risking with inefficient PEP and sanction checks. Politically exposed persons and their related associates are always being monitored by the media and their followers. And just by association, your company can be seen in a good or bad light depending on their political views. And if you doubt the potential risk, remember there was a certain company that was ostracized for supporting the previous US president.
Put your personal feelings aside because when you choose to do business with politically exposed persons, you have to consider the effect it will have on your company and prepare to end up on the adverse media watchlist or worse. This is why independent PEP sanctions are checked by experts or AI-directed software that can provide unbiased decisions based on risk scores and behavior monitoring for a more balanced and accurate view.
Digital identity security is another reason to invest in independent PEP and sanction checks. The information on these individuals must be handled delicately and professionally. Insecure databases can put the lives of their loved ones at further risk due to leaks. Corrupted data or improper B2B customer onboarding can lower or raise risk scores putting your entire identity verification system at risk.
Sanction list screening is not simply crossing a country off your not-to-do business list. It starts with accurate global ID verification, digital identity security, and the right amount of customer due diligence in your customer onboarding process. And achieving AML compliance certification isn’t the only reward of an efficient PEP screening process. Not only are you making it safer to do business with your company, but you are also making the world safer by restricting money laundering activities and the financing of global terrorism.

IDMERIT STANDS FOR GLOBAL FINANCIAL SECURITY

The entire world may not be fully engulfed in a World War, but your actions today can change who finances the next major conflict. As business owners, you are probably more concerned with the future stability of the world’s markets rather than where your customer is getting their money. After all, times are getting treacherous and you want to ensure your business survives.

And here at IDMERIT, we support your commitment to global financial security. Through the development of our IDMkyX platform of APIs that are designed for global ID verification, anywhere in the world. We can identify anyone with the highest degree of accuracy through any device. And assist in enhanced due diligence with ongoing behavior monitoring on politically exposed persons.

Given that Belarus has joined with Russia and the Worldwide Association for Interbank Financial Telecommunication (SWIFT) has imposed its sanctions, your sanction list screening process needs to swiftly account for these changes. We do this by having access to over 2000 global watchlists including OFAC’s and the UN Security Council’s consolidated sanction lists allowing for real-time identity verification. And with our secure databases, digital identity security and management will automatically be part of our identity verification service.

Despite the world’s current focus on the situation in Ukraine, eventually, global bodies will direct their focus to companies and individuals who supported the sanctioned countries and entities. Keep your company out of future PEP and sanction screening checks by partnering with IDMERIT. Talk to us today about our commitment to global financial security.

The post PEP and Sanctions list Screening: The Complete Guide for AML Compliance appeared first on IDMERIT.

Under the oversight of OFAC, the European Union (EU), United Nations (UN) other governing bodies, potential terrorists, fraudsters, and cybercriminals are prevented from entering global economic systems through watchlist screening. It involves monitoring for Specially Designated Nationals (SDN’s), Politically Exposed Persons (PEP), Blocked Person list, and Adverse Media Screening.

As part of your Customer Identification Program (CIP) in your Know Your Customer (KYC) process, you will be required under the Bank Secrecy Act (BSA) to report the identification of these persons when performing enhanced due diligence. Enhanced due diligence and transaction screening and monitoring are required for Anti-Money Laundering (AML) and counter-terrorism measures that are part of your identity verification solution which includes PEP and sanction list screening.

What is PEP and Sanction List Screening?

To sanction may mean to permit, but in this case, sanctions restrict persons, business entities, and countries from trade and official contact. Sanctions, trade embargoes, or tariffs are enforced by any country or country that wishes to punish another country/entity/individual for any perceived trade or criminal breach. Sanction list screening involves checking an individual’s validated ID or business documents against updated sanction lists to ensure the person/entity is not involved in any breaches or is a party to individuals or entities on the list.

According to the Financial Crimes Enforcement Network (FinCEN) and other joint US governing bodies, US public officials are not considered PEP’s. PEP’s consist of current or former: –

A senior official in the executive, legislative, administrative, military, or judicial branches of a foreign government (whether elected or not)

• A senior official of a major foreign political party
• A senior executive of a foreign-government-owned commercial enterprise
• A corporation, business, or other entity that has been formed by, or for the benefit of, any such individual
• An immediate family member (including spouses, parents, siblings, children, and a spouse’s parents and siblings) of any such individual
• A person who is widely and publicly known to be a close associate of such individuals

Specially Designated Nationals (SDN’s) and Blocked Person List is managed by OFAC and include companies, organizations, and individuals who have been identified as posing a threat to U.S. national security and foreign and economic policy. These are usually designated terrorists, officials and beneficiaries of certain authoritarian regimes, and international criminals.

When a company finds itself on the Negative News or Adverse Media Watchlist it can be for several reasons. These reasons are separated and mitigated according to the level of risk. Depending on the level of risk, being on the adverse media watchlist can affect your investments, shareholders, and everyday business relations. Sanctions are only done on persons/entities on this adverse media watchlist only if they pose a threat to national and global economic security.

In terms of economic sanctions against countries, as a business, your options are fairly simple. You either stay with the sanctioned country and continue to do business with them thereby risking sanctions yourself, or you abandon ship. Depending on existing treaties or type of sanction, your home country may not have to acknowledge imposed sanctions. This occurs frequently with China and Russia as they continue to trade with one another whenever the US imposes unilateral sanctions on either one.

How to Get On and Off Sanction Lists?

Getting on and off any sanction list is not that hard. All it takes to get on the list is by participating in financial crime, criminal breach, or military threat, or in the case of Venezuela, an ill-placed insult. Financial breaches can include any monetary crime that can have a widespread economic impact. Crimes like tax evasion, embezzlement, money laundering, and terrorism financing.

Criminal breaches can be threats to national and global security, such as illegal trafficking, illegal immigrants, and terrorists. People on the Denied Persons List are usually criminal elements who have been convicted or indicted in financial or criminal offenses. Once you are a potential threat to a large body of people or economic stability, you can be sanctioned and end up on global watchlists.

In the case of an adverse media watchlist, you and your company can end up on this list through indirect means. Differing political views, personal affairs, and business failures can put you on this list. Getting off the adverse media list, however, is easier than every other list mentioned here. Unless you or your business were involved in criminal activity, most times, it is simply a matter of correcting your mistakes and repairing your reputation.

To get off watchlist and sanction lists, there must be a written request to OFAC or whichever international body that sanctioned you and there will be an investigation into your activities before you are removed. Of course, not having repeat Suspicious Activity Reports (SAR) filed against you or your business will help keep you off those sanction lists. Only persons exempt from Currency Transaction Reports (CTR) are exempt from being reported. Which would include banks, the US Treasury, and some government agencies and officials.

Why is PEP and Sanction List Screening Important?

There is some debate on whether or not sanctions work or if they only hurt innocent citizens. Recently, there have been studies on the destructive impact of sanctions on citizens and when a country chooses to punish a country rather than the regime. In that instance, it is hard to see a clear benefit to sanctions. However, at the business and individual level, sanction list screening has a bigger and more productive impact on the economy and individual safety.

That is due to the in-depth targeting nature of sanction list screening. There is no blanketed recourse unless involvement can be proven. However, in businesses that fail to meet AML compliance repeatedly, there may be some negative fallout for employees and their families.

Global watchlists and sanction list screening are important to global economic stability and security. Watchlist screening prevents criminal and terrorist elements from entering your databases through your KYC verification process, keeps you AML compliant, and helps you avoid fines, cyber threats, and fraud. PEP and sanction list screening protect against fraud, criminals, and terrorists minimizing false positives in your onboarding process and your institution’s financial and reputational damage.

Positive watchlist screening during customer onboarding results in AML compliance with all official regulations and watchlists. As Vincent Gaudel, compliance expert for Accuity warned, “There are personal risks for business executives who engage in willful sanction violations,”. Penalties for individuals can reach $20 million and 30 years in prison, Thomson Reuters reports. Turning a blind eye to sanction list screening to save money, time or avoid losing a potential customer is not worth the risk to your business reputation or bank account.

Important Global Watchlists You Should Be Watching

The US isn’t the only country that inflicts and enforces sanctions. Other countries, economic blocks, and world bodies are known for imposing economic unilateral and multilateral sanctions. For an international company, for better coverage, your PEP and sanction checks should include all countries you are currently doing business with. In the case of Business-to-Business (B2B) operations, the PEP screening process should include document verification and Ultimate Beneficial Owner (UBO) checks.

Some of the important global watchlists that should be part of your PEP screening process are: –

European Union consolidated list

1. OFAC Specially Designated Nationals & Blocked Persons Consolidated List which includes;
   • Foreign Sanctions Evaders (FSE) List
   • Sectoral Sanctions Identifications (SSI) List
   • Palestinian Legislative Council (NS-PLC) list
   • List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List)
   • Non-SDN Menu-Based Sanctions List (NS-MBS List)
   • Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC List)
2. Denied person list
3. Federal Bureau of Investigation Most Wanted Terrorists & Seeking Information
4. Bank of England Sanctions List
5. HM Treasury
6. Non-Cooperative Countries and Territories
7. PEP List
8. EU Terrorism List
9. World Bank Ineligible Firms
10. Department of Foreign Affairs and Trade

This is not an exhaustive list as there are over 2000 global watchlists. Unofficial warning lists like the Ontario Securities Commission can also be taken into consideration. Since there are so many global watchlists to be screened, it is usually done by an independent body.

There are many companies and government agencies that perform PEP and sanction screening. In fact, the Department of Homeland Security (DHS) has a watchlist service that includes using the Terrorist Screening Database, the Federal Bureau of Investigations (FBI) Terrorist Database, and the US Government Consolidated Database with plans to expand into National Security, citizenship, and immigration. Their services, much like Google’s adverse media watchlist screening service, do not include identity verification or validation, which is crucial to an accurate PEP screening process.

How to Perform PEP and Sanction Checks?

Performing D-I-Y PEP and sanction list screening yourself is not doable and would not be recommended even if you are a Fortune 1000 company. Global watchlist screening or PEP and sanction screening are best handled either by the related government agency or a third-party global identity verification service that includes watchlist screening. How PEP and sanction list screening is performed exactly will vary based on the identity verification service provider.

The first step in the PEP screening process is identity verification as part of customer due diligence during the KYC verification process. In this global economy, global ID verification should be the preference. For the best possible match or result, alias or nicknames should be included as well as the data used should be updated and clean.

With validated document verification and adverse media screening for UBO’s as part of your risk mitigation efforts, you can increase your chances for positive identity verification of bad actors. Updated notifications of changes to your watchlists allow you to keep up with recent AML compliance standards. As part of our identity verification service, we keep abreast of these changes and assure you of AML compliance certification.

Manual PEP and sanction checks are not possible with the amount of government watchlist databases you need to check. During new customer onboarding, you need to have the entire onboarding process completed promptly. Therefore, using technology to perform PEP and sanction checks is not an option. Neither is requesting checks by each of these government agencies.

Through our API’s you can have access to many of these global watchlists and have PEP and sanction checks done seamlessly as part of our identity verification service. IDMaml can be used during new customer onboarding in your KYC verification process as part of your CIP program to meet AML compliance certification requirements according to the FINRA Rule 3310 in the Bank Secrecy Act. Adding IDMtrust and IDMkyb helps identify corporate entities and block stolen identities.

Stay Off PEP and Sanction Lists With IDMERIT

Verified global ID verification is the first step in an efficient KYC verification process and that starts with clean and up-to-date data. In designing your company’s CIP program, PEP and sanction screening naturally will be part of enhanced due diligence for high-risk customers identified during customer onboarding. At IDMERIT, we have access to the latest global watchlists and use artificial intelligence in our PEP and sanction checks for a completely automated and frictionless customer onboarding process.

As part of our identity verification service, we will help you design a CIP program that will include Know Your Business (KYB) and KYC verification that meets AML compliance certification requirements. For faster document verification and to validate ID in seconds, IDMscan can be used at the onset of your new customer onboarding process. By using our automated APIs, your customer can smoothly move into PEP and sanction screening and through your customer onboarding process with limited human interactions. Stay off sanction lists and get AML compliance certification with IDMERIT.

Talk to us today to learn more about the PEP and sanction screening process and AML compliance certification.

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