Quick Do-It-Yourself Sanctions List Screening in SAP

Sanctions Screening: What It Is and Why It Matters

Sanctions screening is a straightforward but important process for any company operating internationally. It helps ensure you follow global regulations, reduces the risk of financial or legal issues, and prevents accidental business with entities that might be subject to sanctions.

Here’s a quick look at why sanctions screening is useful:

• Regulatory Compliance – It keeps you aligned with international laws, helping you avoid fines and legal hassles.
• Risk Mitigation – It minimizes potential financial loss, reputational damage, and disruptions by steering clear of risky associations.
• Fraud & Crime Prevention – It helps identify and stop transactions that could be linked to terrorism, money laundering, or other illicit activities.
• Global Trade Assurance – By verifying that transactions meet legal standards, it supports smoother international operations.

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Understanding Sanctions Lists

Governments and international bodies maintain sanctions lists to limit trade and financial activities with certain high-risk individuals, organizations, or countries. Regularly checking these lists is key to staying compliant and avoiding penalties.

Some key sanctions lists include:

• OFAC (U.S. Treasury – SDN & Non-SDN Lists) – Managed by the U.S. Office of Foreign Assets Control, this list identifies individuals and organizations involved in illegal activities. OFAC is known for ist strict enforcements, violations oft he US sanctions programs can be very costly and also US agencies are very active in trying to detect sanctions violations. You can read more about recent actions here: https://ofac.treasury.gov/recent-actions
  This site is also a great resource for learning about violations, how and why they happened, and how to avoid those mistakes.
• EU Sanctions List – Issued by the European Union, it outlines various trade, financial, and travel restrictions.
• UN Sanctions List – Released by the United Nations Security Council, it targets global security threats, terrorism, and human rights abuses.
• UK Sanctions List (OFSI) – Managed by the Office of Financial Sanctions Implementation, it applies to certain individuals, organizations, and regimes.
• Canada (SEMA & FINTRAC Lists) – Under the Special Economic Measures Act, these lists address international security concerns.
• Australia (DFAT Sanctions List) – Maintained by the Department of Foreign Affairs and Trade, it sets out relevant financial and trade restrictions.
• Swiss SECO List – Administered by the Swiss State Secretariat for Economic Affairs, it aligns with UN and EU guidelines.

Since these lists are updated regularly, keeping track of them is important to avoid penalties, asset freezes, or harm to your company’s reputation.

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The Name Matching Problem

Name matching is a critical yet challenging part of sanctions screening. Differences in how names are recorded can lead to both missed risks and unnecessary alerts. Here’s a closer look at the main issues:

• Spelling Variations:
  Minor typos or alternative writing styles can cause a match to be overlooked. Example: A company might be entered as “Global Trade Inc.” in one record and “Globa Trade Inc.” in another.
• Transliteration Differences:
  Names from non-Latin alphabets, e.g. Russian, Arab, or Chinese names, often have multiple valid English versions. Example: The Russian entity “Газпром” might appear as “Gazprom,” “Gaz Prom,” or “GAZPROM.” Similarly, the name “Михаил” can be transliterated as “Mikhail,” “Mihail,” or “Mikha'il.”
• Formatting Inconsistencies:
  Variations in punctuation, word order, or the use of abbreviations/legal entity names can lead to mismatches. Example: “Global Holdings Ltd.” might sometimes be recorded as “Global Holdings Limited”
• Common Names:
  Frequently occurring names can trigger multiple false positives, requiring extra verification. Example: A common name like “Alex Smith” might need additional context to confirm an accurate match.
• Language Nuances:
  Cultural differences in name order or structure add complexity to automated matching processes. Example: In some cultures, the surname precedes the given name, which might confuse standard matching algorithms.

By using techniques like fuzzy matching and incorporating occasional manual reviews, companies can better navigate these challenges, ensuring a more accurate and efficient sanctions screening process.

In this article, we’ll explain how to run a simple(sic!) sanctions screening using the OFAC list in Excel—completely free of charge. The name matching using this fuzzy tool that we will explain below is better than a 1:1 matching that one usually uses in tools like Excel, but it has limitations, please keep that in mind.