Sanctions are defensive, restrictive measures taken by our governments to shield us from financial crime. These sanctions are mainly aimed at individuals, entities, or even countries in general, those that pose a potential threat as a result of certain factors such as the involvement with criminal or terrorist activities.
These high-risk, sanctioned actors are formed by different governments and divided into type-of-threat depending sanction lists available for public reference. But, we will cross that bridge later. The most powerful peacekeeping regulator to make a sanction list is the United Nations, so what do their sanctions stand for?
What are UN sanctions?
UN sanctions list is introduced by the United Nations member countries and organizations to prevent terrorism, weapons proliferation, oppose human rights violations or violations of international treaties, money laundering, deliberate destabilization of sovereign countries, narcotics trafficking, etc.
Depending on a situation, these sanctions put restrictions on economic, cultural, trading, or diplomatic relationships. The example of the UN sanctions is the U.S. long-standing embargo on all commercial activity with Cuba.
The UN list includes such countries as Afghanistan, Central African Republic, Democratic Republic of the Congo, Democratic People’s Republic of Korea, ISIL and Al-Qaida, Iran, Libya, Mali, Somalia, Sudan, and Yemen.
What are the UN sanction types?
There are five main types of sanctions.
End of cooperation, removals of diplomatic ties such as country’s embassies, councils, exiting joint cultural events.
Trade bans, various forms of trade barriers such as tariffs, on certain economic sectors such as food, weapons, medicine, etc.;
Restrictions on travel that can be anything from a comprehensive ban on travel by all nationals of a country, a ban on travel to rebel-held territory within a country, to an aviation ban on all flights into or out of a country, etc.
Disqualification of a certain nation from participating in international events, sports, and cultural boycotts to used as a way of psychological warfare.
These restrictions result in sanctioned nationals and companies not being allowed to conduct monetary transactions or business interactions with certain UN countries. And that is a very important fact that brings us further.
Why are UN sanctions important for businesses?
When a business unknowingly onboards a sanctioned client, it is a danger to their safety and compliance. The consequences might be security breaches, stolen funds, regulatory fines, or civil and criminal penalties. Not something to look forward to.
The solution? Every client must be processed according to the restrictions they or their country bear. As diverse as these sanctions can be, businesses need to be careful and follow the legal guidelines.
How does automated screening software can help to be wary of sanctioned nationals?
Manual check is no longer helpful and sizable enough to check crowds of clients coming to use a certain service or interact with a certain business. Besides, personal data is too tricky to check and can’t be processed as accurately as it can be done with automation.
Screening software proved to be more efficient and precise when it comes to searching and analyzing the data across sanctions lists. To separate a company from any potential risks, an automated KYC/AML solution is the best choice to make as it can help you monitor individuals on global sanctions lists, including OFAC, UN, HMT, EU, and DFAT.