What is the purpose of AML sanction screening?

AML sanction screening is a process to identify and prevent transactions with individuals and entities that are subject to economic sanctions, such as those imposed by the US Treasury Department's Office of Foreign Assets Control (OFAC).

2: Who is subject to economic sanctions?

Sanctions can be imposed on individuals, companies, and governments that engage in activities deemed harmful to national security, foreign policy, or other national interests. Examples include:
Terrorist organizations
Drug kingpins
Weapons proliferators
Rogue states
Entities involved in human rights violations

3: How do I perform AML sanction screening?

AML sanction screening involves checking the identities of individuals and entities involved in transactions against a list of sanctioned parties maintained by government agencies, such as OFAC. The screening process typically involves:
Gathering customer information (e.g., name, address, date of birth)
Checking the information against sanction lists (e.g., OFAC's Specially Designated Nationals and Blocked Persons List)
Confirming the results of the search (e.g., checking against secondary sanctions lists)

4: What happens if a match is found during AML sanction screening?

If a match is found, the transaction should be immediately blocked or frozen, and a report should be filed with the relevant authorities. The institution may also need to take further action, such as filing a Suspicious Activity Report (SAR) with FinCEN.

5: Are there any exceptions to AML sanction screening?

Yes, there are some exceptions to AML sanction screening. For example:
Transactions that are exempt from sanctions under specific regulations or licenses
Transactions that involve humanitarian aid or other charitable activities
Transactions that involve government entities or international organizations

6: How often should I update my AML sanction screening process?

Institutions should regularly update their AML sanction screening processes to ensure compliance with changing regulations and sanctions. This may involve:

Updating sanction lists and databases
Re-training staff on AML/CFT procedures
Conducting internal audits and testing

7: Are there any penalties for non-compliance with AML sanction screening?

Yes, non-compliance with AML sanction screening can result in significant penalties, including fines, imprisonment, and damage to reputation. In addition, institutions may be required to implement corrective actions to address any deficiencies identified during an audit or examination.

8: Can I rely solely on third-party providers for AML sanction screening?

While third-party providers can be useful in supporting AML sanction screening, institutions should not solely rely on them for compliance. Institutions should maintain their own knowledge and expertise in AML/CFT and regularly review the results of third-party searches.

9: How do I handle false positives or false negatives during AML sanction screening?

Institutions should have procedures in place for handling false positives (i.e., matches that are not actual sanctions) and false negatives (i.e., misses that result in non-compliance). This may involve:
Reviewing matches carefully before making a decision
Conducting additional research or due diligence
Filing SARs or other reports as necessary

10: Are there any best practices for AML sanction screening?

Yes, some best practices for AML sanction screening include:Maintaining accurate and up-to-date customer information
Using multiple sources and databases for screening
Implementing regular training and testing programs for staff
Conducting regular internal audits and reviews