EU sanctions: documenting your screening properly

EU sanctions regulations apply directly in every member state and are addressed not only to banks, but to all natural and legal persons. Law firms, notary offices and accountants must also make sure they do not make funds or economic resources available to listed persons. What matters is not only the check itself, but proof of when and against what you screened.

What applies

• Freezing: funds and economic resources of listed persons and organisations must be frozen.
• Prohibition on making funds available: listed persons must not receive funds or economic resources, directly or indirectly. This also covers payments through third parties or trust structures.
• Ownership and control: in the practice of the EU institutions, companies that are more than 50 percent owned by listed persons or controlled by them can also be affected. Beneficial owners therefore belong in the screening.
• Reporting duties: frozen funds and relevant hits must be reported to the competent national authority.

What makes screening reliable

1. Timing: check at onboarding and continuously afterwards. Sanctions lists change often, and a one-off check quickly loses its value.
2. Scope: include clients, beneficial owners, authorised representatives and, where relevant, counterparties and payees.
3. Assess hits: spelling variants, transliteration and similar names produce hits that need to be resolved. A hit is assessed and justified, never simply ignored.
4. Record the outcome: even a check without hits is a result that should be evidenced.

What to document

• Date and time of the check
• List used and list version
• Persons and companies checked
• Result and, for hits, the reasoning behind the decision
• Who carried out or approved the check

Why documentation decides

In an inspection or a dispute, what counts is what you can prove. A check you cannot evidence helps little. A tamper-proof log with date, list version and result, on the other hand, shows that you take your obligations seriously and meet them in a structured way.

Digital tools take care of the legwork: they screen automatically against current lists and create the log at the same time.

Source: Regulation (EU) No 269/2014 on EUR-Lex, as an example of an EU sanctions regulation with an asset freeze and a prohibition on making funds available