Sanctions screening has become an essential line of defence in the global fight against money laundering and terrorism financing.
Lawyers, accountants, real estate agents, and trust and company service providers (TCSPs) occupy crucial gatekeeping positions in the financial system. Their work often involves structuring assets, handling large transactions, and advising on cross-border matters—all of which can be exploited by sanctioned individuals or entities seeking to bypass restrictions, claims Arctic Intelligence.
As such, these professionals are on the front line of preventing illicit access to financial and legal systems.
Sanctions are measures imposed by governments and international bodies such as the United Nations (UN), European Union (EU), and the U.S. Office of Foreign Assets Control (OFAC). They aim to target individuals, companies, and states involved in terrorism, human rights violations, and other illicit activities. Failure to screen clients properly can lead to severe consequences, from financial penalties and criminal prosecution to long-term reputational harm. Beyond compliance risks, unscreened transactions can freeze operations and damage client relationships.
Each profession faces specific obligations and challenges when it comes to sanctions screening. Lawyers must conduct client due diligence (CDD) to verify identities and ensure transactions do not involve restricted parties. They also face litigation risks when representing sanctioned clients. For accountants, the focus is on monitoring financial flows, auditing for red flags, and verifying that clients are not using complex structures to conceal assets or evade taxes.
Real estate agents play a vital role in detecting potential money laundering through property purchases. They must screen buyers and sellers, conduct enhanced due diligence for high-risk jurisdictions, and verify the legitimacy of funds used in transactions. TCSPs, meanwhile, are responsible for verifying ultimate beneficial ownership (UBO) and ensuring corporate structures are not designed to hide links to sanctioned entities.
To remain compliant, gatekeepers should implement comprehensive screening systems and processes. This begins with the use of reliable sanctions databases, such as the OFAC Specially Designated Nationals (SDN) List, the EU Consolidated List, and the UN Security Council Sanctions List. Applying a risk-based approach—categorising clients and transactions by risk level—ensures that higher-risk cases receive enhanced due diligence.
Technology now plays a defining role in strengthening compliance. Automated and AI-driven screening tools can perform real-time checks, analyse complex data patterns, and flag potential matches for investigation. These tools help reduce human error and improve efficiency, although they must be supplemented with trained professionals who understand the regulatory context. Continuous staff training and awareness programmes are essential, as are regular updates to reflect evolving sanctions regimes.
Despite these measures, challenges persist. False positives remain common, requiring manual reviews that consume time and resources. Conflicts between data protection regulations like GDPR and sanctions compliance also complicate operations. Additionally, smaller firms often lack the funds or infrastructure to deploy advanced monitoring systems.
Several high-profile cases highlight the importance of strong sanctions compliance. Standard Chartered Bank, for example, faced over $1bn in fines for processing payments for clients in sanctioned jurisdictions. In Canada, property transactions linked to sanctioned individuals revealed gaps in due diligence by real estate professionals. Similarly, the Panama Papers exposed TCSPs that created entities for blacklisted individuals, demonstrating the dangers of weak ownership verification.
Ultimately, sanctions screening is not just a regulatory requirement but a professional duty. Gatekeepers who invest in robust processes and technology can reduce exposure to risk, uphold ethical standards, and safeguard the integrity of global financial and legal systems.
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