Sanctions Screening... What to expect when you least expect it!

 Martin Lehmann, Director of Platform Products for Treasury Intelligence Solutions, TIS, began our discussion on Sanctions Screening with a summary of his remit. Martin explains that he works with systems and bank connectivity to facilitate data analytics, (sanctions) screening and fraud and cybercrime prevention. TIS has built its Enterprise Payment Optimization (EPO) Platform to support this to provide cash visibility, payment orchestration, and risk mitigation.

When asked if TIS saw the urgency for these services coming, Martin replies, “the need for these products has been clear for years; however, the urgency given the high number of Russian sanctions, was, of course, not predicted. Therefore, we did not anticipate such a spotlight on sanctions screening.” Martin volunteers that “a lot of people are sleeping a lot less well, that’s for sure! Obeying new laws and sanctions is getting much attention by top management everywhere!” Martin also adds, “TIS decided early on to enable our existing Sanctions Screening solution for all customers at no extra charge to help them through the initial months. This has garnered very positive feedback.” In response to what makes Sanctions Screening such a complex and challenging topic, Martin responds, that there are several kinds of sanctions with various consequences. “Clients are trying to educate themselves and improve their processes at the same time! For example, customers are working very hard to ensure that beneficiary names are clearly identifiable and carry full details for the payments process.”

Who can help clients with these issues? Martin clarifies that enterprises must be proactive in seeking advice and clarification from their banks and legal counsel. TIS has also been arranging ‘Expert Evenings’ in different cities, where corporates can interact with various players to get information and learn about best practices. Some of the biggest issues are associated with understanding how sanctions can and will impact a firm and the ability to change processes to meet these challenges! Martin feels that the following three points are key to greater safety and control:

·     People – what training (and awareness) does my staff have? What do they need? When and how often (and at what level of detail) does a company need to act?

·     Processes – are sanctions being carefully and completely taken into account?

·     Tools/IT – what can be put into place to support various processes? Companies without proper tooling will struggle to remain compliant.

Why are tools so important? Martin explains that “tools can automate checks on transactions and highlight if a sanctioned beneficiary or bank is involved. However, we remind clients that tools are just that… and that people need to invest in really understanding and managing risk.” We asked Martin about the issue of decentralized information, i.e., data that must be concentrated for effective decision making. Martin responds that it is nearly impossible to control potential sanctions violations or fraud and cybercrime breaches if data is distributed among various systems, departments and/or countries. The TIS EPO platform provides the ability to centrally consolidate information and manage the payments’ process without interfering with a company’s (possibly decentralized) structure.

It seems that the compliance officer used to be pretty alone in his or her responsibilities. Has this changed? Martin explains, “Yes, this is definitely a different situation today! The topic receives attention from all senior managers, including the CFO, the Treasurer, the Head of Procurement, and other business leaders. As mentioned, there is also greater support for better tooling. However, the issue as to who will review alerts that are generated by sanctions screening as well as the decision to release or stop payment, is still a challenge.”

What can or should be done proactively when a company is building their screening process? Martin explains that it is key to include the entire flow of payments data… or as much as possible to avoid ‘loopholes’ or ‘workarounds’. When asked what is next, Martin replies that he expects more sophisticated tooling for screening, including support for ESG ever. “Enterprises are looking for better ways to measure, monitor and enforce sustainability compliance. Payments data and screening can help.”