With the current administration’s aggressive stance on trade sanctions, as well as the financial and reputational fallout that can occur from violations, companies must take a more proactive and automated approach to DPS. This includes adoption of both sophisticated technology and modern processes needed to quickly and accurately identify potential conflicts before they materialize and negatively impact the business. To improve, companies are advised to:
Ensure tools match business needs – There are many ways for companies to effectively screen against Denied Parties, and ultimately, the mode of delivery depends on what best suits the business. For some companies, a web-based SaaS solution is ideal. However, for ecommerce businesses, an API may be ideal, as it will screen each transaction as it occurs. For those who use an ERP solution, a transaction-level customer and/or vendor screen of data may offer the best best solution. Other businesses, such as those who frequently acquire companies, may benefit from historical screenings of previous transactions. For others, a periodic review of data may be the best solution.
Capture updates in (near) real-time – Denied Party lists change in the blink of an eye, and thus, it’s important for companies to have access to the most up-to-date lists to ensure compliance. By partnering with companies that specialize in DPS solutions, companies can rest assured that any changes to Denied Party lists will be added in near real time. For example, after eight Venezuelans were recently added to the U.S. Specially Designated Nationals (SDN) list, Descartes added those individuals into its technology suite within two hours.
Run dynamic searches – Sophisticated yet flexible search functionality is critical for identifying potential hits. For example, exact and inexact matching must be included within an effective DPS strategy to accommodate misspellings, inaccurate or missing information that can occur in Denied Party lists. In this case, the use of fuzzy logic search structures is especially useful in one-off or ad hoc searches. Due to the unique nature of global DPS lists and screening at a practical level, an effective tool should include options for both a fuzzy logic algorithm to locate close as well as identical matches.
Apply common sense to data outputs – Just because a company gets a “hit” on a search query doesn’t mean a violation has taken place. Often, more scrutiny and analysis of the law itself is needed before action can be taken. Likewise, zero results won’t always mean a company is in the clear. Compliance professionals in charge of DPS must stay up to date on the latest sanction-related news and activity from government entities, ensuring any new additions are screened quickly and monitored closely.
With DPS lists evolving at lightning speeds and an administration in hot pursuit of companies that break sanctions laws, organizations need to improve their DPS tools and processes, or risk facing civil and/or criminal penalties as a result. While it’s impossible to remove all risks that may exist in the vast business ecosystem, a sophisticated DPS strategy can make all the difference.
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