One of the most frequently asked questions – does our company really need to worry about denied party screening? If directly be told, U. S. regulations apply on exporters and also foreign exporters under specific jurisdictions. In the following, we will describe the importance of denied party screening, restricted party screening, their differences and AML screening.
The United States Dept. of State, Commerce, Treasury, and various international govt. agencies have put restrictions on certain entities, individuals and countries on conducting business for a variety of reasons. Denied party screening is the procedure of screening those entities against denied watch lists, export-related restricted and blocked person lists – Dept. of Commerce Denied Persons from BIS, DDTC, OFAC, and OSFI consolidated lists, etc.
What happens if we don’t screen against these lists?
Both short-term and long-term implications of not following the compliance measures can occur with the following:
1. Criminal and Civil penalties
2. Denial of expert privileges
3. Negative media coverage
4. Direct impact on brand reputation
5. And more.
Instances of companies breaking off regulations aren’t uncommon. However, they have faced unfortunate outcomes for not following those compliances. Not only it affects the present, but also proves a dampener for all future plans.
What the differences are between denied and restricted party screening?
For export, financial and trade compliance – those terms have been used interchangeably. But, a few differences between the two include:
Denied parties are denied their export privileges and any occurrence of re-export will lead to violation, whereas restricted parties have whole or partial restrictions for transactions. Restricted party screening is also mandatory to prevent regulatory violations.
Some organizations are blocked by the DDTC for violating Arms Export Control Act.
OFAC-related parties like Specially Designated Nationals (SDNs), Sectoral Sanctions, etc. are blocked and sanctioned for doing business.
How does AML screening come into the picture?
Anti-money laundering (AML) compliance programs effectively fights financial crimes. If not all, a good majority of banking and financial institutions across the globe have stringent measures to prevent financial crimes via AML screening of customers. Basically, a risk-based approach is followed in these cases to identify and monitor any financial wrongdoing, whether for laundering or terror financing purposes.
Is there any mechanism of automation here?
Along with the support of trade compliance experts, companies have built effective programs and software solution to meet those requirements of exporters, arms exporters, companies, individuals and different entities.
What are the benefits of those compliance programs?
Reduce the burden of evaluating through multiple lists of sanctioned entities. The screening software does this procedure in a short span of time.
Enable a superior mechanism for seamlessly acknowledge the troubles rather than learning it at a later point in time.
CRM and ERP integrations via API make it a one-stop solution. Various organizations have followed this procedure to make things easy at their ends.
Dynamically and automatically screen entities at one’s will.
Accurate results for screening customers, clients, workers, employees, consultants and other trade partners help an organization work on their core business processes.
About The Author:-
Linqs Inc answers on worrying for denied party screening in organizations. He gives a basic explanation on its difference from restricted party screening. In the last section, he covers AML screening and existing role of software for screening procedures.