Maintaining Sanctions Compliance in a Rapidly Changing Regulatory Environment

Every commercial relationship has hidden risks. When it comes to trade compliance, the “50% Rule” from the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) is especially problematic. This rule specifies how OFAC determines whether companies are considered blocked because they are owned by people or organizations who appear on the Specially Designated Nationals (SDN) or Sectoral Sanctions Identifications (SSI) lists — even if the company itself is not on the lists.

The financial penalties for violating the 50% Rule are high — higher than any other area of trade compliance. You don’t want to get this wrong. The responsibility for compliance rests fully on the organization engaged in doing business, and compliance is very difficult.

In a dynamic regulatory environment, where direction is not always explicit, it’s extremely difficult to perform the due diligence needed to ensure proper compliance with the 50% Rule. It would be very challenging as an individual company to conduct your own research all over the globe. Such an effort would require a dedicated team and a substantial investment of time and resources. Even then, you still might not get it right because of the complexity in the relationships, the speed at which those relationships change, and the volume of the data.

How can you get started on the path toward improved compliance?

It starts with examining and understanding your own risk. Where are your biggest risks today and what do you need to block? Find a partner who can help you evaluate your level of risk and work closely with you to determine where the biggest compliance pitfalls lie — right now. Ideally, your partner should offer not only the data you need but also the automation and technology solutions necessary to put that data to work.

A robust software solution such as Thomson Reuters ONESOURCE™ Denied Party Screening can help you take proactive steps toward maximizing compliance. This advanced software-as-a-service (SaaS) solution screens more than 350 global lists for restricted persons, companies, and sanctioned or embargoed countries. Its sophisticated search engine can be fully tailored and configured to let you manage an appropriate level of risk for your company — minimizing false positives without missing actual hits.

Read more in our whitepaper below