What are Sanction and Watchlists?

Sanction lists and watchlists are lists of problematic entities (usually people, companies or vessels) that have been identified by relevant government authorities and are targeted for asset freezing or prohibited from doing business in that country or with nationals of that country, whether they are people or companies.

Usually the lists concern individuals and companies owned or controlled by, or acting for or on behalf of, targeted sanctioned countries. They also list individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific, but concern law enforcement or national security. In the U.S. such individuals and companies are called “Specially Designated Nationals” or “SDNs.”  Their assets are blocked and persons are generally prohibited from dealing with them.

KYC3 automates the list checking process by allowing a full text search of most of the lists published worldwide with a single click.  If there are any hits, further investigation and a risk based assessment can be made.

Why you need to watch the others’ watchlists…

Many people think that by verifying that their clients are not on the sanctions lists published by the competent authorities in their jurisdiction, be that the U.S. Treasury Office of Foreign Asset Control or Her Majesty’s Treasury Consolidated List of Targets, that they will be compliant and therefore safe.

This is a false sense of security garnered by a “tick the box” mentality.  In order to properly manage risk, a risk based approach must be taken to understand and address that risk. This is why all lists need to be screened with a comprehensive tool.  Because an individual identified and listed on one list is likely to show up later on lists in other jurisdictions.  Governments share information, and while intelligence can be shared quickly, it rarely is necessary to do so with such urgency.  Which means that the client who’s not on a list in your jurisdiction but on a list in another may become a serious problem for your organization in the near future.

After all, you don’t want to end up with an epic fail like Obama…

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• Obama’s Epic Fail: CIA Wanted Boston Bombing Suspect Placed on Terror Watchlist (atlasshrugs2000.typepad.com)