Melissa UK Team | 2022, United Kingdom

The invasion of Ukraine has seen a plethora of new sanctions instigated by many countries against leading politicians, businesspeople, and entities in Russia and Belarus. With new sanctions announced by the UK government and others, on almost a daily basis, it’s not easy for organisations to keep up with all the changes – which they are legally required to do.

Access to sanctions lists, also called watchlists, play a vital role in ensuring businesses effectively undertake to know your customer (KYC) and anti-money laundering (AML) checks at the onboarding stage. They also enable them to run cross-checks against those on their existing databases.

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Failing to properly assess for sanctions could see organisations facing hefty fines. Brand damage can also result from the negative publicity associated with providing services to someone who’s been sanctioned.

To ensure compliance with the new sanctions, it’s vital to take a best practice approach to digital identity operations:

Obtain sanctions data from trusted global sources

To effectively screen for those who have been sanctioned, use an automated tool that collects and synthesises sanctions data from a wide range of trusted sources worldwide, such as government, regulators, and credit agencies. It is best to use a tool with access to global sources of sanctions data that continually scans for updates and delivers them in real-time. This also helps to provide a smooth user experience for those signing up for services – something many expect in the digital age. This automated approach is a much more efficient and accurate way to deliver sanctions checks. Relying on manual checks, for example, using search engines, could leave your organisation exposed to sanctions breaches and the associated cost in fines and to your reputation.

PEP screening

Along with sanctions data, organisations must obtain politically exposed persons (PEP) data from around the world. A PEP is defined as ‘an individual who is or has been entrusted with a prominent public function’ and it is ideal to screen for this in the early stages of any onboarding activity. It is critical that PEP data also contains details of relatives and close associates (RCAs) of PEPs, as well as those sanctioned. This matters because there is a tendency for these groups to be involved in or drawn into crime. In the UK, financial organisations have a legal requirement to undertake enhanced checks of both domestic and foreign PEPs.

You can find out more about What is a Politically Exposed Person here.

Undertake adverse media checks

Compliance teams must monitor the latest news and alerts in real time, not only for those under sanctions, but also for PEPs and anyone else who could have potential negative regulatory, financial, or reputational consequences to their organisation. It’s vital to remain up to date on any new information concerning the status of an existing user of services, so organisations must augment their standard sanctions and PEP screening process with checks on adverse media and negative news. These tools scan the global news media, sourcing information on those with new sanctions against them, and where legal cases are pending.

You can find out more about What is Adverse Media Screening here.

Training

The appropriate training and guidance must be provided for compliance staff. These critical team members must clearly understand the latest sanctions measures, as well as how to handle customers that are impacted by the sanctions.

Systems and controls

Are your organisation’s onboarding and payment screening platforms able to act on those who have been sanctioned? And once these individuals have been detected, do you have the systems in place to block transactions and quickly freeze funds? Identifying those who have been sanctioned is just one part of the process. The next stage requires having processes in place to immediately act on this information.

Take a wider approach to automated identity checking

Using an automated tool that identifies in real-time those on disparate sanctions lists, including PEPs and RCAs, works well as part of a more comprehensive approach to automated KYC checks and AML operations. This includes using electronic identity verification (eIDV) that can cross-check user-provided details against reputable data streams to verify the identity of individuals in real-time to ensure they are who they say they are. Also, when onboarding, implementing document scanning with optical character recognition (OCR) and machine-readable zone (MRZ) technology enables businesses to immediately and accurately determine the authenticity of the ID documents provided online. Because these operations are seamlessly integrated into the onboarding process, the user journey remains smooth and friction-free.

The conflict in Ukraine, and the numerous resulting sanctions, underlines why all organisations must have access to continually updated real-time sanctions data, including data on PEPs and RCAs, from governments and regulators worldwide. With automated functionality, these lists can be easily used in conjunction with automated id verification and document scanning technology for an accurate, fast, and cost-effective KYC and AML process.

We offer comprehensive, global sanctions data along with a full range of identity verification solutions. Please contact us for more information / to discuss a trial.