For financial institutions, the biggest sanctions risk may not be the names already on official lists, but the ones that have not been added yet. As designation processes trail months or even years behind the conduct that triggers them, firms that rely on lists alone could be onboarding tomorrow’s sanctioned parties today.

According to Opoint, sanctions screening is the practice of checking customers, companies and transactions against official sanctions lists to identify parties barred or restricted from financial activity.

These measures are imposed by governments, regulators and international bodies to limit or prohibit dealings with specific individuals, organisations and countries. The aim is to stop a bank, business or platform from unknowingly serving or transacting with a sanctioned party.

The challenge is that no single authority sets the rules. UN Security Council sanctions apply globally and are usually written into national law by member states. EU sanctions cover every member state and are published in the Official Journal.

In the US, the Treasury’s Office of Foreign Assets Control (OFAC) runs sanctions programmes with extraterritorial reach, applying to US dollar transactions worldwide. In the UK, the Office of Financial Sanctions Implementation (OFSI) has administered the country’s regime since Brexit. On top of these, individual nations maintain their own lists, which can go further than, or diverge from, multilateral frameworks.

This overlapping landscape means cross-border organisations must screen against several lists at once, since a party may be designated by one authority and cleared by another.

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