Sanctions Screening Process

Sanctions Screening Process

India’s anti-money laundering laws and related anti-financial crime regulations mandate that the regulated entities need to conduct sanctions screening to counter financing of proliferation of weapons of mass destruction and financing of terrorist risks. It ensures that the regulated entities don’t deal with any of the individuals and entities sanctioned under the list issued by the United Nations Security Council (UNSC), Ministry of Home Affairs (MHA), and other relevant sanctions regimes. The other relevant sanctions lists can be decided based on the firm’s risk-based approach.

In this infographic, we take you through the sanctions screening process that starts with the Know Your Customer (KYC) process. You need to collect the identity documents from the customer – a natural or legal person (along with the IDs of the beneficial owners).

Then, you conduct screening, where the person is screened against the aforementioned lists using sanctions screening software or manually through the lists available on the respective organization/authority’s website. It is essential to conduct screening before onboarding the customer and on an ongoing basis.

If the sanctions screening shows relevant results or indicates some matches, one needs to identify whether it’s a true match or a false match.

In case of a true match, the customer’s case must be forwarded to the Principal Officer, who is obliged to submit a report to the Nodal Officer capturing the details of the sanctions match and funds frozen. Further, in case of a match with a designated person, regulated entities must terminate the business relationship and not execute any transaction with such person or entity.

However, one must note that the job’s not done yet!

As mentioned above, it is essential for regulated entities to conduct sanctions screening regularly, preferably on a daily basis. It lets a regulated entity know immediately if any onboarded customers get added to the sanctions list. Then, they can immediately take the necessary action, such as to terminate the business relationship and file the report with the Nodal Officer.

We are committed to assisting proper enforcement of AML and CFT regulations to regulated entities in India by designing a personalised AML framework – policies, internal controls, and procedures – and ensuring effective implementation of the same.

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