Sanction Screening

Within the customer due diligence process, known by its acronym in English DD, we have as central stage in the process of validating / verifying in lists issued by national and international organizations, if any of the users, prospects, clients or related parties of the Institution, is involved with any type of crime, among others, those related to money laundering or financing of terrorism; the above, so that the Institution can take the corresponding measures.

 By implementing this type of programs within the Institution, it helps to mitigate the risk in the matter in question and in turn allows the Institution to comply with the measures imposed by the relevant regulatory agencies in accordance with the regulations applicable to each sector. 

The sanction screening is a tool of great value that helps the institution, even before the beginning of the relationship, to know if someone related to the structure, in its case of the Fund, is related to organized crime and thus, take the measures defined by the regulator. Additionally, it is important to verify the identity of the Client and the authenticity of the identification documents that the Institution collects, which may be done through the corresponding Electronic Means. 

If, as a result of the verification in lists, there is a match, additional validations will be required to determine if it is a true match or to discard it as a false positive. If the match turns out to be true (depending on the list), the relevant authorities or regulator must be notified in accordance with applicable regulations.

Financial institutions around the world face challenges in implementing a robust sanction detection program. These challenges range from technological, systemic, regulatory, to cultural advances. Therefore, before implementing the program, the financial institution may choose to conduct a Due Diligence of the Institution per se, which would help the organization understand its needs. 

Final Recommendations:

Establish policies, criteria and measures to identify its Clients and thus manage the risk and guarantee the corresponding compliance. 

The best practice is to check lists on a daily basis. 

Without forgetting the relevance of the periodic updating of the data and verification of the authenticity of the documents obtained digitally from the Clients provided at the beginning to accredit their identity.

Acknowledgments

Thanks to Prof Alexa Mateos, for her guidance and valuable inputs