Over the last several weeks, the Trump administration has given a whole new meaning to “know who you’re dealing with.” Within a matter of days, the U.S. imposed hardline sanctions against Venezuela, Iran and Russia, prohibiting companies from doing business with individuals, entities or agencies identified on the government’s Denied Party lists.
As these lists continue to expand and change, all companies—from Main Street to Wall Street—will need to take proper precautions to ensure they are not in violation of any trade restrictions. This means conducting vigilant screenings against hundreds of Denied Party lists maintained by both the U.S. as well as countless other countries, particularly for those conducting business overseas. What’s worse, many of these lists are nothing more than a data dump - the information is unorganized, inconsistent, and as a result, makes it incredibly difficult to determine if companies are actually in compliance.
While many companies have turned to technology to help identify and flag potential business conflicts within these lists, many more have yet to approach Denied Party Screening (DPS) in the most sophisticated fashion possible. In fact, some of the world’s most successful and admired companies have been caught in the line of fire.
In a July 2017 disclosure to the U.S. government, Amazon reported it had sold and delivered tens of thousands of dollars worth of merchandise—including electronics, toys, and books—to sanctioned parties in Iran between 2012 and 2017. One month earlier, Exxon Mobil was slapped with a two million dollar fine from the U.S. Treasury Department for violating trade sanctions against Russia. For foreign companies, the stakes are even higher. International businesses are some of the most fined entities for violating U.S. sanctions. Everything from selling American-made goods to illegal parties to using wire transfers to avoid raising red flags have resulted in massive penalties, negative media attention, and damage to invaluable brand reputation.
What’s more, the U.S. Department of State and the U.S. Department of Treasury are in hot pursuit of any company or individual who breaks the law, with fines ranging from hundreds of dollars into the billions for persistent and/or willful, intentional violations. Some of the larger fines in recent history (although later reduced) topped an astonishing $8.9 billion and $1.19 billion.
Additionally, smaller-to medium-sized companies with fewer resources to adopt and manage solutions to run scans (yet arguably more on the line should they be subject to hefty fines or penalties) are particularly vulnerable. For those companies, manual screenings are still fairly common, introducing an incredible amount of risk and potential exposure to the business as a result.
Manual screenings are problematic for a variety of reasons. First and foremost, they are extremely labor-intensive, subjective and highly error prone, often leading to false positives, or missed results all together. DPS lists may include hundreds of thousands of entities at any point in time. Combine that with spelling variations, as well as different languages and alphabets, there could be billions of possible search criterion and combinations. Without advanced solutions or processes in place, there is no feasible way for companies to adequately screen against these lists.