What is Sanction Check?

Blog / 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 financial 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 three 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. For example, some political sanctions are canceling senior government visits and diplomatic persons' withdrawal from that target country. 

Military Sanctions

Some countries cannot produce their 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

Individuals' sanctions are 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.

Many regulators in the global and local areas 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. Therefore, 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. Financial institutions need to be involved in some control processes to comply with Anti-Money Laundering regulations. A sanction search is the most important process for financial institutions to ensure AML compliance. Sanction Screening Services such as Sanction Scanner automatically allow you to perform sanction checks. 

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. These checks aim 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 customer's risk level must be determined. Customer Due Diligence and Enhanced Due Diligence procedures enable the customer to determine the risk level. The customer is scanned in sanction, PEP, and Adverse Media data in this process. s a result of these controls, the risk level of the new customer is determined. 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 specific intervals.

Sanction and PEP Screening in Transaction Screening Process

Millions of financial transactions take place over the day through financial systems. Therefore, the regulators determined that the crimes were committed through financial transactions. Herefore, 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. However, annually controlling all transactions can be a waste of time. Action Scanner provides automatic control of financial transactions with its  PEP Screening service 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. hus, financial crime is prevented.

Transaction Screening Case Study - Istpay

PEP Screening in Background Check Process

The most important thing for companies is the company reputation. A company loses its reputation; it loses its customers. C companies make internal controls at regular intervals to avoid these risks. E ployment Background Check, Pre-employment background check ve the company takes company background check measures to protect the company's reputation. E ployment 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. C 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. C companies can't check them manually. An artificial intelligence-driven compliance software solved this problem. T is software that automates the compliance process of the companies. F financial institutions can quickly check their customers with compliance software. It is software that scans the sanction lists and alarms instantly for suspicious transactions.

Sanction Scanner provides AML Name Screening Software and Transaction Screening Software  O r AML Solutions monitor comprehensive global sanction, PEP, and Adverse Media data in real-time  M et your AML obligations in customer onboarding and transaction screening with Sanction Scanner.

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