Today’s international market is evolving faster than ever, and as the potential for economic advancement grows, so do the dangers and risks. Conducting business with the wrong people can cost you thousands of dollars in fines and jeopardize your global reputation.
Fortunately, there are measures you can take to protect your business. For example, a secure automated watchlist screening solution is the foundation for better customer relations and robust global trade compliance.
But what exactly are watchlists, and how do they play into your global trade strategy? How can implementing automatic watchlist screening benefit your international organization? Read on to find the answers.
What is a Watchlist?
Watchlists are government databases that contain extensive information regarding suspicious or criminal activity of an individual, group, or organization. Thousands of watchlists are stored at the international, domestic, or even local levels. The records housed in these databases include:
- Suspected terrorist affiliation
- Fraudulent activity
- Involvement in money laundering
- Information about PEPs (politically exposed persons)
- Involvement in human trafficking
- Involvement in the trafficking of narcotics or other illegal substances
- Involvement in cybercrime
What it Means to be on a Global Watchlist
Once a country, organization, group, or person is placed on an international watchlist, they are vulnerable to various possible punishments. Some sanctions outright ban trade with targeted parties, while others restrict or limit trade interaction. Sanctions measures typically include one or more of the following restrictions:
Trade Embargoes – Governmentally imposed import and export bans on specific products or industries, such as weapons or technology.
Transfer Prohibition – Also known as asset freezing, it is the blocking of bank accounts and other financial assets of parties placed on international watchlists. The goal of freezing assets is to deprive the organization in question of funds needed to conduct criminal activity.
Business Limitations – Bans placed on business dealings such as trade or investment with persons, groups, or countries on a global watchlist.
Admission Restrictions (Travel bans) – Travel prohibitions are implemented to prevent individuals from traveling to other countries observing the current sanction measures.
How Does the Watchlist Screening Process Work?
Organizations involved in global trade depend on governmental watchlists when deciding whether to take a potential client on board or not. Therefore, most companies utilize a watchlist screening software program to maximize efficiency.
A watchlist screening program simultaneously searches through hundreds of governmental databases, alerting you to any suspicious activity or criminal involvement pertaining to any existing or potential clients or customers your company may have. Some of the watchlists screened by these programs include:
- The US Office of Foreign Assets Control (OFAC)
- The Blocked Persons and Specially Designated Nationals (SDN) List
- The United Nations Security Council Consolidated List (UNSC)
- The EU Terrorism Watchlist
- The Bank of England Sanctions List
- The HM Treasury Consolidated List
- The PEP List
- The World Bank Ineligible Firms List
- The UK Office of Financial Sanctions Implementation (OFSI)
- The Consolidated Canadian Autonomous Sanctions List
- The Australian Department of Foreign Affairs and Trade (DFTA) Consolidated List
Advantages of A watchlist screening strategy
Adding watchlist screening to your company’s international compliance ecosystem can deliver all kinds of benefits, including decreasing workload, increased security, and live updates regarding adjustments made to government watchlists.
Helps you Comply with Global Trade Regulations
Watchlist screening is a necessary component of a successful global trade compliance strategy. An automated system prevents you from unintentionally dealing with a questionable company or organization, saving you thousands of dollars in fines and potential fraud damage.
Lessen your Compliance Team’s Workload
Without a software-based solution, a company must conduct watchlist screening manually. While this method works to a degree, it can take your global compliance team hours or even days to complete the same amount of work that a modern software program can do in a matter of minutes. Additionally, electronic watchlist screening completely eliminates the possibility of mistakes made by human error.
Seamless ERP Integration
Most modern organizations rely on an enterprise resource planning (ERP) program to help them organize business aspects like finances, project management, and supply chain operations. Watchlist screening software easily integrates into existing ERP systems, allowing daily screenings to become part of your daily routine.
Minimize Threats to Your Business.
Automated watchlist screenings protect your business from frauds, criminals, terrorists, and explicitly designated nationals, reducing false positives and protecting your organization’s finances and overall image.
Stay Updated on Watchlist Changes
Government watchlists are updated daily, making it extremely difficult to know if one of your international business partners has recently been put under new sanctions. Automated watchlist screening keeps you updated on all recent adjustments and will alert you if you are at risk for compliance infringement issues.
Does your Business Need a Watchlist Screening Solution?
In today’s market, leaving matters to chance is never a good idea, especially when conducting business internationally. The consequences of violating the global sanctions can be very serious, even if an offense was carried out unknowingly, with honest intent. Civil fines for unintentionally dealing with an individual or group on a global watchlist can reach up to one million US dollars per violation.
While these penalties are aggressive, they can easily be avoided with a watchlist screening program. The price of upgrading to an automatic system more than pays for itself when compared to the hours of work required to screen a client manually and can prove to be an invaluable tool in your global compliance system.
Protect Your Business with OCR Global Trade Management
Understanding who your potential and existing clients are is crucial to minimizing sanction violations that could cost you huge sums of money and put your international reputation at risk. You can never be too careful. So, if you are serious about taking your global security to the next level, now is the time to implement electronic watchlist screening into your global compliance ecosystem.
Fortune 500 companies all around the world trust OCR Global Trade Management to provide them with industry-leading technology that protects their businesses from the threats that lurk in the modern global trade market. We would love to show you what a digital watchlist screening system can do for your organization. Request a free product demo today!