For several years now, customer due diligence has been a mandatory obligation for every natural and legal person, but now, in the light of the events in Ukraine, issue has gained new relevance, as new sanctions against the Russian elite and businessmen are announced every day.
With more and more persons appearing on sanctions lists every day, the customer due diligence process requires much more time, as you also need to assess the persons connected to the customer – the beneficial owners, members and officials.
In order to help companies navigate the sanctioning requirements, we have prepared 3 key steps that should be taken into account before entering into transactions and in the customer day-to-day monitoring.
Step 1 – check whether the entity is on the sanctions lists – sanctions.lursoft.lv
An important aspect of the customer due diligence process is the checking of sanctions lists. Given that there are several sanctions lists, which are regularly updated, such checks can be time-consuming. It should be emphasized that in the last two days, several hundred new entities, both legal and natural persons, have been included in the lists of sanctions.
To make this process easier for businesses, Lursoft has combined information on entities in the sanctions lists of Latvia, United Nations, European Union, United Kingdom and the US Treasury Office of Foreign Assets Control (OFAC) into a single list. The list is updated several times a day from first-hand sources to ensure access to up-to-date information.
Checks on the Sanctions Lists are free, thus ensuring that everyone has access to information relevant for customer assessment. Importantly, Lursoft provides access not only to up-to-date information, but also to historical data, so that during the due diligence process, anyone can also check whether the subject of interest has previously been on any of the sanctions lists, as such information should also not be overlooked during the contracting process.
It should be noted that in the customer due diligence process, it is important to check not only the legal entity with which the transaction is to be concluded, but also its related parties. For this purpose there is Lursoft AML report, which covers and analyses the risks defined in the guidelines developed by the SRS that businesses should check during the customer due diligence process.
Step 2 – if you need to check several customers at once
There may be situations where you need to check information on several customers at once. For example, there are multiple parties involved in a transaction, you want to check whether an existing customer is on the sanctions lists, or you need to investigate a customer’s major business partners as a part of your due diligence.
In such cases, the most convenient solution is to check the persons on the sanctions lists by uploading a file. As part of the service, you can upload your client list in Excel (.xlsx or .xls) format and automate the screening of sanctions lists for all legal persons on the list, as well as their related persons – officials, members, beneficial owners, proxies and persons in the control chains of beneficial owners. As a result of the check, you will receive a clear list of whether any person has been found on the sanctions lists.
With this solution from Lursoft, you will be able to research your customers’ sanctions lists faster and easier, and the automated verification signature will eliminate the likelihood of human error.
Given that the company must also be able to prove that it has carried out the beneficial owner verification as well as the checking of the customer and related persons on the sanctions lists, Lursoft records the dates and times of the requests so that the company can, if necessary, confirm to the supervisory authorities that it has carried out the customer due dilligence.
Step 3 – regular customer monitoring
In the wake of Russia’s comprehensive attack on Ukraine, countries around the world regularly announce new sanctions against Russia. In order to keep up-to-date with the latest information and to make sure that no sanctions have been imposed on any of the companies on the client list or their related persons, a regular monitoring process is important.
In case the monitoring identifies a match between the EU, OFAC, UN or Latvian National Sanctions List and your customer list, you will receive a notification with a link to the Sanctions List report. You will be able to check the Sanctions Lists for matches, as well as information on which of the lists and programmes a person is included in. Sanctions monitoring allows monitoring of legal and natural persons registered both in Latvia and abroad.
Lursoft emphasises that in situations where a match with an entity on the sanctions lists has been established during the customer due diligence process, cooperation with the legal or natural person in question must be terminated and the State Security Service or the Financial Intelligence Unit shall be notified thereof in accordance with the procedures specified in Section 17 of the Law On International Sanctions and National Sanctions of the Republic of Latvia.
For support and answers to your questions on sanctions list screening and customer monitoring, please contact your Lursoft Customer Consultant.
Lursoft regularly organises educational and explanatory seminars to explain and educate businesses on the risks of sanctions breaches, customer due diligence and the establishment of an internal control system. Please follow the current seminar schedule here.