Sanctions screening for defence companies

• End users behind distributors: a sale through a distributor, agent or integrator can end with a party the company never contracted with.
• State-linked counterparties: ministries, armed forces, state-owned companies and research institutes can be designated themselves or owned by parties that are.
• Ownership: a counterparty can be unlisted while the company or person that owns or controls it is designated.
• Suppliers and subcontractors: components and services come from many tiers, and a designated supplier is as much a problem as a designated customer.
• Visitors and delegations: foreign visitors to sites, trade shows and briefings represent organisations, and the organisation can be designated even when the visitor is not.
• Names spelt many ways: a name is written the way each invitation or contract happened to spell it, and sanctions records carry aliases, former names and original-script spellings.

1. 1

   Map the parties

   Customers, end users, distributors, agents, suppliers, subcontractors, financiers and visitors, with the organisation each one represents.

2. 2

   Screen the parties and their owners

   Sanctions and PEP screening of each party and its key people, and ownership screening of the companies and bodies behind them.

3. 3

   Screen before the commitment

   Before a contract, a shipment, a technical exchange or a visit, where the guest list or the order is drawn up, not at the gate.

4. 4

   Monitor through the contract

   Re-screen customers, distributors and suppliers when lists change, across contracts that run for years.

5. 5

   Record and hand over

   Keep the evidence of every check, and pass true matches to the export control, legal and security functions that make the decision.

Defence companies are generally not obliged entities under anti-money laundering law. Their compliance burden comes from two other places: export controls, which license what may be exported, transferred or shared and with whom, and sanctions, which prohibit dealing with designated persons and making funds or economic resources available to them.

Export controls are the firm's own obligation and run on their own lists, licences and end-use checks, for example under the International Traffic in Arms Regulations and the Export Administration Regulations in the United States, the Export Control Order in the UK, and the EU's rules on dual-use items and military exports. Screening a party against a list does not replace an export control check. on8.ai screening also covers US export-control and debarment lists, including the Consolidated Screening List with the BIS Entity List, the BIS Denied Persons List and ITAR debarments, and the Japanese and Taiwanese end-user lists. It holds no UK or EU export-control list, and classification, licensing and end-use checks remain the firm's own.

Sanctions are applied through the regimes of the places a firm operates, such as UN Security Council measures, the EU's restrictive measures, the US programmes administered by OFAC and the UK's financial sanctions administered by OFSI. Many regimes include arms embargoes, and asset freezes attach to designated organisations as well as designated individuals. Under the OFAC 50 Percent Rule, a company owned by blocked persons is blocked even when it is not named on a list.

• Clear scope: know exactly which sanctions and export-control lists the tool covers, and which national lists you still need to check separately.
• Every published name: each sanctions record searched under its aliases, former names and the original-script spellings its sources publish.
• Ownership screening: the controlling parties of a counterparty surfaced, with ownership rules such as the OFAC 50 Percent Rule applied.
• PEP screening: officials of customer governments and state-owned bodies identified, as the data allows.
• Batch screening: a delegation list or supplier file screened in one run, before invitations or orders go out.
• Evidence and deployment: an audit trail a security or export control officer can file, and control over where sensitive counterparty data is processed.