Better safe than sorry: sanctions list check
What are sanctions lists?
A sanctions list is an official directory listing individuals, groups, and organizations against which economic and/or legal restrictions have been placed. Sanctions are imposed by states or by communities of states such as B. the European Union or the Security Council of the United Nations. Sanctions lists include checking for compliance with export control law, US prohibition and early warning lists, and the European anti-terrorism regulations (EC 881/2002 and 2580/2001). In addition to the aspects mentioned, sanctions should help curb organized crime, money laundering and corruption.
The Common Foreign and Security Policy (EU-CFSP) list drawn up by the European Union is one of the most important sanctions lists for Germany and Austria, and the SECO list for Switzerland. The Specially Designated Nationals and Blocked Persons List (US-SDN) is one of the central US sanctions lists.
An important difference: While an embargo is aimed at a specific country, sanctions are country-independent. It is therefore not sufficient to only take increased precautionary measures for orders from abroad in selected countries. The sanctions must be observed regardless of the whereabouts of the listed persons.
© Screenshot of the financial sanctions list database FiSaLis 2022
All companies are affected
In many cases, companies are of the opinion that the issue of sanctions lists only affects international corporations or companies that export a particularly large number of goods. This view is deceptive. All companies are obliged to check whether their business contacts appear on a sanctions list. In the event of violations, the Foreign Trade and Payments Act (AWG) and the corresponding EU regulations provide for severe fines and imprisonment.
Companies that maintain business relationships with customers and suppliers from the USA should not only consider the European but also the US sanctions lists in order to avoid economic risks. Even if a business relationship is possible without any problems after checking the European sanctions lists, a violation of the American lists can lead to the company being barred from trading with the USA.
International sanctions lists
There is no central, consolidated list of sanctions. Instead, companies have to take a large number of different sanctions lists into account when exporting. These include:
- Common Foreign & Security Policy [EU-CFSP]
- Consolidated list of financial sanctions targets [HM List]
- Specially Designated Nationals List [US-SDN]
- Denied Persons List [US-DPL]
- Unverified Parties List [US-UVL]
- Entity List [US-EL]
- US Statutorily Debarred Parties List [US DTC]
- Nonproliferation Sanction List [US-ISN]
- Sectoral Sanctions Identification List [US-SSI]
- Japan METI - The Foreign End User List [JP-METI]
- UN ISIL (Da'esh) & Al-Qaeda Sanctions List [UN-AQSL]
- Iran Watch List Suppliers [IW-SUP]
- Iran Watch List Entities [IW-SUS]
- Sanctions against Russia and Ukraine [EU-RUUA]
- UN Consolidated United Nations Security Council List [UN-CSL]
- State Secretariat for Economic Affairs SECO [SECO-List]
- Foreign Sanctions Evader's List [US-FSE]
- US List of Persons Identified as Blocked Solely Pursuant to Executive Order 13599 [13599-list]
Important: The authorities keep updating the sanctions lists. It is therefore not sufficient to check a new contact or customer once against the sanctions lists. Rather, contacts such as debtors or creditors in the ERP software should be checked at regular intervals and the results logged in a legally compliant manner.
Automated sanction list check in ERP
The manual comparison of one's own contacts against a large number of differently structured sanctions lists is time-consuming and error-prone. The US list SDN alone contains more than 25.000 entries. In addition, it must be ensured that the current and therefore valid version is used.
KUMAVISION therefore has the App Compliance Check for the ERP software Microsoft Dynamics 365 developed with which the sanctions list check can be integrated into company processes and automated. For example, the release of documents in purchasing as well as in sales can be linked to the sanctions check. Documents can therefore only be released if there is a valid check. For example, if a new customer is created in the ERP software, the app automatically performs a list comparison in the background, taking into account all relevant sanctions lists. If the contact is on the list, the app automatically blocks them in the ERP system. The user is notified and can then take further steps such as notifying the authorities.
Since sanctions lists are constantly updated, the app not only allows for ad hoc queries but also for master data to be checked at intervals of your choice. In both cases, the result is logged in a legally compliant manner, which companies can use to conveniently prove compliance regulations. Another advantage: the app also takes different spellings into account by using fuzzy logic, which ensures that no contact to be blocked is overlooked, even in the event of typing errors.
The Compliance Check app integrates seamlessly with Dynamics 365: A debtor is blocked after an automatic sanctions list check.
Full system integration in Microsoft Dynamics 365 and the complete traceability of the test results greatly simplifies the consideration of sanctions lists and thus relieves the burden on employees. The app also ensures that companies work with current sanctions lists at all times, which creates legal certainty.