Sanctions Lists: Who’s Listed and Why It Matters

A sanctions list is a formal register comprising individuals, entities, sectors, vessels, or aircraft subjected to legal restrictions by governments, international bodies, or regulatory agencies. Such restrictions may involve asset freezes, prohibitions on transactions, or limitations on access to financial systems and trade. Organisations frequently utilise these lists for activities like customer onboarding, transaction monitoring, and maintaining compliance with global regulations.

Sanctions lists are crucial safeguards in risk and compliance. For instance, financial institutions screen new clients against lists like the OFAC Specially Designated Nationals (SDN) list to identify persons or entities involved in activities contravening international law or posing security threats.

Globally, sanctions lists are issued by authoritative bodies to enforce their foreign policy, security interests, or economic goals. Key issuers include:

United States

• OFAC Sanctions List: Administered by the Office of Foreign Assets Control (OFAC), the SDN list identifies individuals, entities, and nations involved in illicit activities, including terrorism financing.

European Union (EU)

• The EU maintains consolidated lists of entities and individuals subject to restrictive measures, promoting peace and security globally.

United Kingdom

• Post-Brexit, the UK publishes its consolidated sanctions list, targeting terror and non-proliferation actors under its independent regime.

United Nations (UN)

• The UN Security Council issues sanctions to its member states, encompassing asset freezes or trade embargoes focused on conflict resolution and terrorism mitigation.

These governing bodies update their lists frequently, reflecting geopolitical developments and compliance risks.

Sanctions lists generally include:

• Identifying Information: Names, aliases, birth dates, and contact details.
• Legal References: The legal basis or justification for the sanction, outlining the underlying, governing mechanisms.
• Designation: Whether the restrictions pertain to individuals, sectors, or entities.
• Compliance Obligations: Specific actions required, such as freezing assets or barring transactions.

For example, the SDN list explicitly identifies individuals connected to transnational crime or terrorism.

Different sanctions list varies in focus. Key categories include:

Targeted Listings

Focus on named individuals or entities identified for specific non-compliance incidents.

Sectoral Sanctions

Focus on industry-based restrictions, targeting fields like energy or finance linked to sanctioned regions.

Ownership and Control (50 Percent Rule)

This rule states that individuals or entities owning 50% or more of a sanctioned entity must also be treated as restricted. Financial institutions often rely on solutions like LSEG World-Check for structured data that helps interpret these rules accurately.

Sanctions lists frequently require updates for reasons including amended laws and emerging global risks. Notable characteristics include:

• Rapid Updates: Inclusion or removal of targets often occurs without notice.
• Versioning: Organisations must track updates and maintain documentation of changes.
• Consequences: Lack of timely updates can result in regulatory penalties.

LSEG Risk Intelligence solutions assist compliance teams by offering real-time updates to sanctions data - streamlining screening efficiency, minimising risks, and enabling precision.

Sanctions lists form the backbone of sanctions screening, practised by compliance teams to ensure adherence to legal requirements and mitigate risks:

• At Onboarding: New customers are screened against databases managed by organisations such as the UN and OFAC.
• During Ongoing Monitoring: Event-triggered or periodic reviews help identify emerging risks.
• Matching & Review: Lists employ fuzzy or exact algorithms for detecting possible matches under broad datasets.

Example Use

A bank uses LSEG World-Check One platform for onboarding a new corporate client. During the process, the system flags its Ultimate Beneficial Owners (UBOs) under control-based sanctions policies.

Maintaining a comprehensive framework around sanctions compliance is non-negotiable. This involves:

• Written Policies: Detailing which sanction lists are referenced and compliance protocols.
• Technical Controls: Implementing alert thresholds and regular quality checks to avoid false positives.
• Audit Trails: All customer matches and escalations must be thoroughly documented for regulatory audits.

LSEG’s established risk intelligence platforms, such as World-Check empower organizations to efficiently handle governance complexities.

Real-time updates ensure compliance alignment. To illustrate:

1. Cross-Border Payments: Screening every transaction across jurisdictional sanctions lists like OFAC.
2. Supply Chain Partnerships: Vetting regional suppliers against the UN or EU consolidated lists using dynamic, real-time solutions like LSEG World-Check On Demand.
   

LSEG’s suite of compliance solutions is designed to address both the complexity and significance of sanctions lists for financial organisations. Key aspects include:

• Screening Precision: Reduce false positives and accelerate compliance through clean clustering of secondary identifying fields (World-Check One).
• Real-Time Insights: With World-Check On Demand, firms gain instantaneous access to real-time sanctions intelligence, helping them ensure payments comply with global financial regulations.