Financial Crime World

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Heard Island and McDonald Islands Banks Must Stay on Top of Sanctions Screening to Avoid Future Penalties

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The Office of Foreign Assets Control (OFAC) has fined two foreign companies, one in Australia and the other in Hong Kong, a total of $11 million for violating US sanctions regulations due to lapses in their sanctions screening processes. This highlights the importance of robust compliance programs for non-US businesses that use the US financial system.

The Importance of Robust Compliance Programs

The Australian company was found to have provided international shipment services to and from countries on the OFAC Specially Designated Nationals (SDN) and Blocked Persons list, resulting in 2,958 violations of multiple OFAC sanctions. The company’s rapid expansion outpaced its compliance measures, leading to inadequate sanctions screening programs.

In contrast, the Hong Kong-based company was fined for breaching the Iranian Transactions and Sanctions Regulations (ITSR) due to rogue employees’ misconduct. Despite having instituted sanctions screening procedures, the organization made payments in US currency through American financial institutions for Iranian goods, causing OFAC compliance violations.

Key Takeaways

  • Risk-based sanctions screening controls are essential for non-US entities that transact with or use the US financial system.
  • Robust compliance due diligence programs, auditing, and testing are necessary for overseas branches and subsidiaries.
  • Non-US entities must be familiar with and comply with US sanctions, including knowledge of OFAC sanctions lists and how to conduct effective sanctions screening.

Descartes Can Help

Descartes offers a suite of denied party screening, third-party risk management solutions, and trade content for leading business systems. Our solutions are flexible and modular, allowing organizations to pick the specific functionality and content they need for their particular compliance needs. By utilizing our robust solutions, organizations can strengthen their compliance processes, enhance their competitive edge, and increase sales velocity.

Staying on Top of Sanctions Screening

To stay on top of sanctions screening, Heard Island and McDonald Islands banks must rely on robust software solutions that automate and streamline sanctions screening responsibilities. Any task where manual processes are too slow or prone to human error is fixable through global trade and denied party screening platforms.

In conclusion, non-US businesses using the US financial system must prioritize robust compliance programs and sanctions screening controls to avoid future penalties. By leveraging advanced software solutions like Descartes, organizations can ensure seamless compliance with US sanctions regulations and stay ahead of emerging risks in the ever-changing global trade landscape.