What is Sanction Check?

Sanctions are penalties imposed on individuals or institutions that do not comply with laws or rules. Governments or global organizations generally apply a sanction decision to other states or individuals. A sanction check is to take measures to prevent transactions with persons prohibited from certain transactions and activities. There are several reasons for sanctions. The main reasons are political and economic disputes. Political and economic disputes between countries lead to sanctions against each other.

What Are The Types of Sanctions?

There are several types of sanctions. All of these sanctions are based on different reasons. The reasons and types of sanctions are significant for companies.

Economic Sanctions

Economic sanctions are a foreign policy instrument between "diplomacy" and "war." There are 3 main objectives of economic sanctions.

  • Change the behavior of the target country
  • Undermining the target country
  • Punish the target country

Diplomatic Sanctions

Diplomatic sanctions are political measures taken to express dissatisfaction between the two or more governments. Some of the political sanctions are the cancellation of senior government visits and diplomatic persons' withdrawal from that target country. 

Military Sanctions

Some countries cannot produce their own military equipment. Therefore, the most common type of military sanction is the prohibition of the sale of military equipment. Strong states warn the weak states by using this advantage.

Sanctions on Individuals

Sanctions on individuals are sanctions imposed on political leaders, economic persons, or illegal persons. Governments or organizations sanction terrorists, drug traffickers, money launderers. Organizations and governments can put bans on their trade relations. Their bank accounts can be blocked.

There are many regulators in the global and local areas that control financial institutions. The purpose of these checks is to combat financial crimes. Regulators require these institutions to know their customers. Regulators periodically publish know-your-customer guidelines.

Why Is The Sanction Check and PEP Check Required For Companies?

Money laundering, bribery, financing of terrorism, and corruption are financial crimes considered important worldwide. The majority of these financial crimes occur through financial systems. Regulators aim to prevent financial crimes by regulating companies in the financial sector. Various Anti-Money Laundering regulations and regulations have been published for this purpose. To comply with Anti-Money Laundering regulations, financial institutions need to be involved in some control processes. A sanction search is the most important process for financial institutions to ensure AML compliance. Sanction Screening Services such as Sanction Scanner allow you to perform sanction checks automatically. 

Sanction and PEP Screening in Customer Onboarding Process

The customer onboarding process is a critical process for financial institutions. According to "Know Your Customer" requirements, companies have to make some checks in the customer onboarding process. The purpose of these checks is to identify the customer's ability to pose any threat. In the first stage, the accuracy of the customer information is determined. After the customer identification information is verified, the risk level of the customer must be determined. Customer Due Diligence and Enhanced Due Diligence procedures enable the customer to determine the risk level. In this process, the customer is scanned in sanction, PEP, and Adverse Media data.  As a result of these controls, the risk level of the new customer is determined. And measures are taken to prevent damage to company values. If there is no doubt, the customer's account will be opened. However, companies have to carry out checks at certain intervals.

How did Papara speed up the customer onboarding process?

Sanction and PEP Screening in Transaction Screening Process

Millions of financial transactions take place over the day through financial systems. The regulators determined that the crimes were committed through financial transactions. Therefore, according to AML regulations, financial institutions must control the financial operations of their customers. If financial transactions are not controlled, money laundering and terrorist financing are committed. Manually controlling all transactions can be a waste of time. Sanction Scanner provides automatic control of financial transactions with its  PEP Screening service provided with API support. Receivers and senders performing the process are checked in seconds in various data of 200 countries. If there is a suspicious transaction, the system gives an alarm and stops the financial transaction. Thus, financial crime is prevented.

Transaction Screening Case Study - Istpay

PEP Screening in Background Check Process

The most important thing for companies is the company's reputation.  If a company loses its reputation, it loses its customers. Companies make internal controls at regular intervals to avoid these risks. Employment Background Check, Pre-employment background check ve company background check measures are taken by the company to protect the company's reputation. Employment Screening is performed on our employe to check the possibility of any risk for our company. With the pre-employment screening, the compliance of the person we will employ to our company values ​​is determined. Companies present their Employment history records as evidence of their audit status. 

How Do Companies Comply With Regulations?

Financial institutions have to sanction check their customers to comply with Anti-Money Laundering (AML) regulations. Financial institutions need sanction screening to protect their reputation and not violate sanction decisions. With the development of technology, manual sanction checks became a waste of time. There are over a thousand sanctions lists in the world. Companies can't check them manually. Artificial intelligence-driven compliance software solved this problem. This software automates the compliance process of the companies. Financial institutions can quickly check their customers with compliance software. These software scan the sanction lists and alarm instantly for suspicious transactions.

Sanction Scanner provides AML Name Screening Software and Transaction Screening SoftwareOur AML Solutions monitor global comprehensive sanction, PEP, and Adverse Media data in real-time. Meet your AML obligations in the process of customer onboarding and transaction screening with Sanction Scanner.

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