Whether you’re a small sole proprietorship or a Fortune 500 company, good business practices will contribute to having a successful business. In addition, forming strong business relationships with dependable clients creates a business environment built on trust and loyalty.
Unfortunately, the world is filled with individuals seeking to utilize a business entity to bring harm to others. So, how can you protect your business from entering into business with the wrong people?
The answer is provided by various United States agencies and other foreign governments that have composed denied party lists, also referred to as restricted party lists.
What Are Denied or Restricted Party Lists?
Although the terms denied party list and restricted party list are used interchangeably, there’s actually a difference between these lists.
- Denied party lists refer to individuals or entities that have been wholly denied export privileges. Having any kind of business dealings with organizations on these lists is prohibited.
- Restricted party lists refer to organizations from which you can either be:
- Totally restricted, meaning that it’s prohibited to transact with them altogether (like with those on the denied party lists).
- Partially restricted, meaning you are prohibited from making specific transactions or trading particular goods or technologies with them, depending on the terms of their restrictions.
What Information is Used to Identify Companies on Denied Party Lists?
Several organizations have composed denied party lists that identify parties that you shouldn’t do business with. These denied parties are usually identified by their:
- Name
- Address
- Any alias’ used
- Personal information (for example, date of birth)
Why Are Businesses Placed on Denied (Restricted) Party Lists?
An organization is added to the denied party lists for a couple of reasons. Some of the reasons include:
- Being identified as a terrorist organization.
- Having some kind of affiliation with a terrorist organization.
- Showing some type of history of corrupt business practices.
- Conducting business in a way that could pose a threat to national security.
The Role of Denied Party Screening
So what exactly is denied party screening? Denied party screening refers to the process in which your company compares the names of customers, business partners, facility visitors, and any other entities they do business with to the official watch lists provided by various global agencies. Doing so will ensure that your company avoids establishing business relationships with whom it’s illegal to do so.
Let’s consider some of the most crucial things about the denied party screening process.
When Should Your Business Conduct a Denied Party Screening?
Many people believe that denied party screening takes place only when doing business with international entities. However, the screening process is expected to occur from the first point of contact between your organization and the entity you want to do business with.
Some of the common scenarios where your organization might establish contact with a third party that should be screened include:
- Interactions from the human resources
- Financial transactions
- Requests for a quote
How Often Should Denied Party Screening Occur?
Avoiding entities on the denied party lists can become tricky because some business transactions occur daily, while other business transactions can take several weeks or months to complete. For this reason, your company needs to be screening organizations on an ongoing basis.
Besides initial contact, many organizations continuously screen third parties when:
- Orders are placed
- Finances change
- A transaction is moved through the different stages in your order processing lifecycle
Screening continuously will safeguard your business from entering into business with those added to denied party lists. In addition, denied party screening is vital because denied party lists can change daily.
Some organizations, for example, Amazon, have a whole team that’s “responsible for the companywide screening technology and processes that mitigate the risk of Amazon conducting business with unauthorized denied parties or sanctioned countries and regions.”
What Are Some Organizations That Provide Denied (Restricted) Party Lists?
One organization that has created a denied (restricted) party list is the United States Department of Commerce’s Bureau of Industry and Security (BIS), and they refer to their list as the denied persons list.
Other organizations in the United States with denied party lists include:
- State Department
- Treasury Department
- Justice Department
- Department of Homeland Security
- Department of Defense
However, the denied party lists established by the United States aren’t the only lists your company will have to be aware of. Screening has to be done against the lists of many foreign countries and international bodies. This is especially important when conducting international business. Some of these denied party lists include:
- HM Treasury Consolidated list (from the United Kingdom)
- European Consolidated List
- Europol and Interpol lists
- Consolidated Canadian Autonomous Sanctions List
What Are The Penalties for Triggering a Compliance Violation?
Failure to comply with regulations on who you can do business with can adversely affect your organization. Compliance violations can result in the following:
- Steep fines. Depending on the type of violation, penalties can range anywhere from $250,000 in administrative cases to $1 million per violation in criminal cases.
- Jail time. When criminal violations occur, sentencing can reach up to 20 years.
Even if you’re not looking at the worst-case scenario, your organization may face denial of export privileges, which can also lead to the end of your valuable company. Denied party screening is vital to any business that wants to succeed.
OCR Services Inc. is Your Denied Party Screening Solution
While many organizations may decide they want to perform denied party screenings manually, it might be crucial to know that there are over 140 different denied party lists through which you need to screen any third parties.
What’s the most business-savvy solution? Leaving the screening process in the hands of OCR Services, Inc. For over 30 years, OCR has anticipated rapid expansion and changes in global trade compliance regulations and procedures. By continuously innovating and streamlining the export and import process, our clients can focus on what’s really important – the growth of their core business and their bottom lines.
Our Watch List Screening software provides organizations with the ability to check all individuals, businesses, and countries against governmental and non-government denied party lists to ensure no business transactions occur with an entity that’s prohibited by law.
Contact us today for more information on OCR’s denied party screening services!
Reference Links:
- https://fortune.com/fortune500/
- https://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern
- https://www.amazon.jobs/en/teams/DPS#:~:text=Protecting%20Amazon%20and%20Customers,or%20sanctioned%20countries%20and%20regions.
- https://www.bis.doc.gov/
- https://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern/denied-persons-list
- https://www.state.gov/bureaus-offices/under-secretary-for-arms-control-and-international-security-affairs/bureau-of-international-security-and-nonproliferation/office-of-export-control-cooperation/
- https://home.treasury.gov/policy-issues/financial-sanctions/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists
- https://www.justice.gov/
- https://www.cbp.gov/trade/trade-community/programs-outreach/blocked-denied-debarred
- https://www.defense.gov/
- https://sanctionssearchapp.ofsi.hmtreasury.gov.uk/
- https://data.europa.eu/data/datasets/consolidated-list-of-persons-groups-and-entities-subject-to-eu-financial-sanctions?locale=en
- https://www.interpol.int/en/How-we-work/Notices
- https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/consolidated-consolide.aspx?lang=eng
- https://www.ocr-inc.com/
- https://www.ocr-inc.com/watch-list-screening/
- https://www.ocr-inc.com/contact-us/
