Corporate Sanction Screening Interview Question and Answers

Last Updated on Aug 28, 2025, 2k Views

Corporate Sanction Screening interview question and answers

1. What are sanctions, and why are they important in corporate compliance?

Answer:
Sanctions are restrictive measures imposed by governments or international bodies such as the UN, EU, or OFAC to prevent business with certain individuals, entities, or countries. They are important because engaging with sanctioned parties exposes the corporation to regulatory, reputational, and financial risks, including heavy fines and loss of banking relationships.

2. What types of sanctions do you know?

Answer:

Comprehensive sanctions: Broad restrictions on an entire country (e.g., North Korea, Iran).
Targeted/Smart sanctions: Specific individuals, entities, or sectors.
Sectoral sanctions: Restrictions on particular industries, like oil & gas or finance.
Trade sanctions/embargoes: Restrictions on goods/services.
Financial sanctions: Freezing of assets and restrictions on financial transactions.

3. Which sanctions lists should corporates check against?

Answer:

OFAC SDN List (U.S.)
UN Sanctions List
EU Consolidated List
UK HMT Sanctions List
Local regulatory lists (e.g., RBI in India, MAS in Singapore).
Corporates often use screening tools like World-Check, Dow Jones Risk & Compliance, or in-house screening systems.

4. How do you handle a potential sanctions hit in a screening process?

Answer:

Review the match details (name, DOB, location, ownership, etc.).
Differentiate false positives from true matches by analyzing additional data.
Escalate true matches to compliance or the sanctions team.
Document decisions with clear reasoning and evidence.
If confirmed, block/reject the transaction and report to regulators if required.

5. What’s the difference between AML and Sanctions compliance?

Answer:

AML (Anti-Money Laundering): Focuses on detecting illicit funds entering the financial system.
Sanctions compliance: Focuses on preventing transactions or business with restricted countries, entities, or individuals.
They overlap but sanctions breaches are strict liability, meaning even unintentional violations can lead to penalties.

6. How would you monitor corporate clients for sanctions risk?

Answer:

Conduct onboarding screening against all sanctions lists.
Apply ongoing monitoring for changes in ownership, beneficial owners, and counterparties.
Review transaction monitoring alerts for dealings with sanctioned jurisdictions.
Perform enhanced due diligence (EDD) for high-risk corporates in sectors like defense, shipping, or energy.

7. Can you explain the concept of ‘50% Rule’ in OFAC sanctions?

Answer:
OFAC’s 50% Rule means if one or more sanctioned persons own (directly or indirectly) 50% or more of an entity, that entity is also considered sanctioned, even if it’s not explicitly named on the list. Corporates must monitor ownership structures carefully.

8. What steps would you take if a corporate client is found linked to a sanctioned entity?

Answer:

Stop transactions immediately.
Escalate the case to the sanctions compliance team.
Conduct a detailed investigation into ownership and business relationships.
File a regulatory report (e.g., STR/SAR) if required.
Terminate or restrict the relationship in line with company policy and legal obligations.

9. What are recent global trends in sanctions compliance?

Answer:

Russia/Ukraine conflict sanctions – increased complexity and volume of restrictions.
Use of AI/automation in sanctions screening.
Focus on beneficial ownership transparency.
Stricter penalties for sanctions breaches (record fines in 2022–25).
Greater cross-border cooperation among regulators.

10. Scenario Question:

A corporate client in Europe trades with a partner in the Middle East. Screening flags the partner’s parent company as 51% owned by a sanctioned individual. What would you do?

Answer:

Treat the partner company as sanctioned under the 50% Rule.
Block or reject transactions.
Escalate to the compliance/sanctions team.
Report the issue to regulators.
Advise the client on potential risks and alternatives.

✅ Tip for you in interviews:

Always mention documentation, escalation, and regulatory reporting in your answers.
Show awareness of global sanctions regimes (not just OFAC).
Use the risk-based approach where applicable.