Use Case: Data Matching for Sanction Screening

Sanctions screening is a process where companies match their data against sanctions lists provided by international sanctions bodies to meet sanction compliance policies. This is to ensure that companies don’t accidentally trade with sanctioned criminals, individuals, entities, or regions; failing which they could risk severe penalties.

Sanctions screening mainly deals with contact data, and includes sensitive information like passport numbers, bank account numbers, national ID numbers and other sensitive data. Therefore, companies are required to have a data management framework in place to meet sanction compliance requirements – whilst ensuring complete adherence to data privacy rules.

By screening against a comprehensive set of data, businesses can help to ensure that they are not doing business with sanctioned parties.

The importance of sanctions screening is related to governments around the world imposing restrictions or ‘sanctions’ on certain territories, countries, individuals, and entities that are engaged in criminal activities and have broken international law. Crimes that trigger a sanction include human trafficking, money laundering, war crimes, terrorism, and many other criminal acts that affect international law and order.

These restrictions are recorded in what is called a sanctions list and are governed by sanctions regulatory bodies. These lists are collated either by government bodies or by international bodies such as the UN and the European Union. Businesses are required to keep up with these lists to ensure they do not engage in any trade or contact with the names on the list.

Failing to stay updated with a sanctions list could lead to:

• Fines ranging up to $20 million
• Prison terms can be as long as 30 years
• Hefty sums of settlements (depending on several mitigating factors)

As the world embroils in political warfare, sanctions screening has become more demanding.

Cases of banks and businesses being fined in millions are hardly new.

In the past, banks like BNP Paribas and Societe Generale suffered huge penalties, paying $8.9 billion and $1.3 billion respectively in fines.

Just in 2020, Warren Buffett’s Berkshire Hathaway Inc was also fined $4.2 million after a subsidiary based in Turkey deliberately violated OFAC sanctions against Iran!

Financial institutions and businesses across the globe are fined millions for violating sanctions regulations, which is only getting harsher by the day.

You should care because if you don’t have a sanctions screening process in place, not only will you lose money and reputation, but you will also get in trouble with governments and international laws.

There is a lot to lose for not being sanctions compliant.

Companies need to consider different sanctioning bodies depending on their trading territories, the currency they are trading in, and their partnerships with entities and organizations. Some governments have their own sanction lists, therefore, it’s important that you are fully aware of the governing bodies you’re answerable to if you engage in global trading.

The four main types of sanctioning bodies to consider are:

The US Office of Foreign Assets Control (OFAC)

The OFAC administers and enforces economic sanctions against countries, entities, and individuals that it deems as terrorists or criminals. Trade restrictions, asset blocking, and other dealings are prohibited unless authorized or expressly exempted by statute.

The names of prohibited individuals and entities are listed in the OFAC’s list of Specially Designated Nationals and Blocked Persons (SDN list, available on OFAC website), against which companies are required to tally their data to ensure they are not trading with the listed individuals.

EU Consolidated List of Sanctions

Similar to the OFAC, the EU has a consolidated list of sanctions that apply to all EU citizens and corporate entities wherever they are located in the world. The EU has over forty different sanctions regimes in place, some of which are mandated by the United Nations Security Council while others are adopted autonomously by the EU. Sanctions are imposed through arms embargoes, travel bans, asset freezes, and other economic measures such as restrictions on imports and exports.

Companies can use the EU sanctions map to determine regions where sanctions apply.

The HM Treasury Sanctions List

Businesses and entities belonging to or operating within the UK’s territories have to follow the HM Treasury Sanctions List, administered by the Office for Financial Sanctions Implementation (OFSI) in the UK.

The UN Security Council Consolidated List Search

The UN’s security list consists of all individuals and entities subjected to measures imposed by the UN Security Council. The list is made up of approximately 700 individuals and 253 entities or groups belonging to countries like Afghanistan, Central African Republic, Congo, Iran, Libya, North Korea and many others.

These lists are publicly available. Companies need to make sure they run a match with these lists at the following times:

✔ Onboard new partners and traders, especially from countries that are high on the sanction list

✔ On a regular basis for existing customers and third parties

✔ When there is a suspicious transaction.

In addition to these specific times, companies should also consider screening their data for sanctions screening on a risk-based basis. For example, companies that operate in high-risk industries or that have customers in high-risk jurisdictions may need to screen their data more frequently. Companies should have a process in place to review and investigate potential sanctions matches.

In the next section, let’s take a look at the basic process of implementing a sanction screening process.

According to Deloitte, the sanctions screening process can be summarized as internal and external data sources being matched against each other using a matching engine that detects similarities, indicating a possible match.

Once a match is identified; an alert is then generated for the compliance officer to review and assess whether the alert is a true match or a false positive.

Note: The data matching performed for sanctions screening is hardly simple. Because names can contain non-Latin letters, aliases, abbreviations, and even information from disparate sources, the engine needs to have advanced functionalities to detect similarities.

This process depends on a robust data match software that uses a combination of match algorithms to match different types of data.

According to Deloitte: financial institutions relying solely on sanction lists from regulatory websites must ensure that their process should involve consolidating data from multiple sources, which may be in different formats. In addition, some individuals/entities will be included in more than one list, so it is necessary to remove duplicates as not doing so may cause an alert to be generated twice. In such cases, the financial institution should consider implementing a sanction list management system to clean, parse and format the list data in order to improve matching accuracy and reduce the number of false positives.

Data matching is a technology that achieves these core goals:

✔ Consolidate data from different sources

✔ Data de-duplication

✔ Match against sanction list

Businesses need a powerful data matching tool with the ability to deploy a combination of match algorithms (such as fuzzy, numeric, and exact) to match different types of data.

A data matching tool with the highest accuracy level will be able to identify:

• Different versions of a spelling, for e.g, Catherine instead of Kathryn
• Shortened names, for e.g, Lizzie instead of Elizabeth
• Odd characters and spaces within fields
• Punctuation marks within fields
• Numbers within text fields
• Abbreviations and inconsistencies
• Name reversals and variations
• Duplicate entries

With the right data matching solution, you can perform the “match” process in days. It is one of the quickest ways to ensure you meet a compliance requirements before trading with international partners.

WinPure is a pioneer in advanced data match technology. We use a combination of match algorithms along with proprietary algorithms to clean, deduplicate, and match datasets within and across different data sources.

Sanctions screening is a time-sensitive project, especially when you’re trying to launch into a trade partnership with third-party groups, you need a solution that can help you identify potential matches instantly.

With WinPure, you can:

1. Consolidate data from multiple sources:

WinPure allows for easy data connectivity, meaning, you can plug in multiple data sources at a time to clean and match as required. WinPure supports SQL, XML files, Snowflake and other database sources. You can use this feature to tally your data source against the sanctions list. Simply download, import, and get started.

2. Advanced cleaning options:

With options like a Knowledge Library and a Word Manager, you can customize your data cleaning preferences without having to code. WinPure also gives you an overview of the problems affecting your data at an attribute level. For example, you can see which of your data attributes has odd characters, non-printable characters, or empty values. You can choose to clean these problems with a single click.

3. Powerful data match capabilities:

Use three different match algorithms (fuzzy, exact, numeric) to match your data. Control your match thresholds, set your fuzzy level scores, and choose to create master records for the final match against the sanction list to ensure you’re not matching duplicate entries. WinPure’s data match software offers the highest level of match accuracy in the industry, thereby, limiting the occurence of false positives and negatives.

4. No-code solution for data/IT managers: 

You don’t need a Python or R-language trained specialist to clean and match your data for sanction screening. Using WinPure’s no-code data match solution, you can clean, merge, purge, and match against multiple lists at a time, without having to write a single line of code.

5. Improve efficiency and accuracy:

Often, businesses fail to meet sanction compliance requirements simply because they don’t have the time or resources to regularly audit or process their data. When the need arises, they make impulsive decisions – such as hiring developers to create algorithms for data match. Not only is this inefficient, but the sheer urgency of the project can cause failure, mishaps, even inaccurate and false results.

If you need to run a basic sanction screening match, you don’t need a 6-figure Python developer. You need a software that your IT/data manager/project manager can use to match the data. As long as your main user understands the logic behind data matching and knows what they want from the data, you can get this done in no time without having to spend an exorbitant amount of money in hiring fresh talent.

Here’s a quick preview of how WinPure works. See how you can clean and dedupe data in minutes? This is what you need as an important tech resource for matching sanction data.

You may not even think it’s a problem, until the government finds out one of your trading partner is on a sanctions list. Avoid the problem before it happens. Incorporate sanction screening as part of your data management process. You don’t need a multi-million dollar investment in cleaning your database and regularly auditing it against international sanctions lists. All you need is a dedicated personnel equipped with a powerful solution to regularly audit and maintain the data.

To know more about how you can use our tool to prepare your data for sanction list screening, feel free to give us a call and get a consultancy!