Key Takeaways from the January 21st Wolfsberg guidance on sanctions:
• Financial Institutions (FIs) and other relevant organizations should seek to adopt a risk-based approach to sanctions screening and to consider all aspects of a comprehensive sanctions screening control framework.
• While sanctions screening is a primary control, it has its limitations and should be deployed as part of a wider effective Financial Crime Compliance program, to assist with the identification of sanctioned individuals and organizations. In other words, customer profile screening paired with transnational and behavioral analysis go hand-in-hand.
• It is important to have a clear strategy with respect to sanctions screening, to mitigate the risk of being exposed to sanctioned parties and countries. That strategy should be based on the documented risk assessment and risk appetite of the company.
• Technology remains a key enabler in the effectiveness of identifying financial crime risk through screening, making the process more efficient and on a real-time basis.
• Companies should ensure that people involved in the end-to-end sanctions screening processes are adequately trained and supervised and that all relevant information should be made available to regularly assess the effectiveness of sanctions screening controls.
The fundamentals of the guidance are derived from legal/regulatory requirements, as well as expectations and global industry best practice. It is not intended to suggest all FIs should apply all elements in this guidance to the same level; rather, it attempts to demonstrate where sanctions screening can be an effective part of a wider sanctions compliance programme, where it has limitations as a control and where a risk based approach is appropriate. The guidance includes sections on the definition of sanctions screening, the fundamental elements of a sanctions screening programme, consideration of a risk based approach, technology, alert generation and handling, reference data, transaction screening, list management and lookbacks.