Trade Finance Forum › Forums › Trade Finance › Companies › How can banks and other financial institutions prevent themselves from dealing with sanctioned persons and businesses? › Reply To: How can banks and other financial institutions prevent themselves from dealing with sanctioned persons and businesses?
Banks and other financial institutions can prevent themselves from dealing with sanctioned persons and businesses by regularly screening their customers against the lists of sanctioned parties published by governments and international organizations. Additionally, businesses can also employ sanctions screening software to automate the process. Furthermore, businesses should also have an internal compliance program in place to ensure that all transactions are conducted in compliance with applicable laws and regulations. Finally, businesses should conduct due diligence on any new relationships and be aware of any changes in the ownership or control of existing customers.
In some cases, a transaction may be illegal, but there is no interest in the transaction that can be blocked, like that of a Specially Designated National (SDN) or a blocked person or government. In these circumstances, the transaction is either not executed because it is deemed to be fraudulent or it is denied outright and sent back to the person who initiated it.