The denied party screening process is a general term for the due diligence review of a business’s internal lists to ensure that transactions are not being conducted with entities included on a sanctioned list, watch list, concern list and more as well as countries that are either embargoed or sanctioned. It is also necessary to maintain accurate audits of a company’s denied party screening process and records of their compliance efforts.
Falling under the need to demonstrate reasonable care, denied party screening and restricted party screening is undertaken to comply with the safety standards of the governments and agencies worldwide. The denied party screening process consists of comparing restricted party screening lists to an organization’s internal catalogs of customers, vendors, suppliers, employees, transactions, etc.
The United States, for example, restricts or prohibits U.S. individuals and companies from shipping or providing services to parties listed on denial, debarment, and blocked persons lists. These lists are updated frequently by the U.S. government.
Individuals and businesses conducting international transactions should perform periodic screenings to demonstrate reasonable care and apply reviews as goods move throughout the supply chain.
Failure to comply and conducting business with denied persons can result in criminal or civil prosecution as well as denial of export privileges.
In the event that a company, entity or person on the list appears to match a party potentially involved in a transaction, additional due diligence must be conducted. There may be a strict prohibition, licensing requirements, evaluation of the end-use or user to ensure it does not result in an activity prohibited by U.S. regulations, or a multitude of other restrictions.
Various Restricted Party Screening Lists and Requirements
Among the parties the U.S. government has added to the denial, debarment, and blocked persons lists, there are varying levels of restrictions. Individuals and companies may be placed on different restricted party screening lists and these different lists indicate varying requirements placed upon shippers seeking to trade with these parties. Additionally, though the terms denied party screening and restricted party screening are used interchangeably, there is a difference between the two.
With denied parties, there is typically a strict denial of shipping privileges. U.S. individuals and companies are prohibited from transporting goods and providing services to the individuals and entities on these lists. These persons/entities present a greater risk to U.S. national security or foreign policy interests.
Restricted parties, unlike denied parties, are eligible to receive products and services from U.S. individuals and companies; however, there are additional review processes required. Proper due diligence for U.S. companies shipping and providing services to restricted parties often specific and special licensing.
Parties of Concern
Parties of concern often indicate the presence of a “red flag”. In these cases, a government agency has been unable to verify the end-user in prior transactions. These red flags should be resolved before proceeding with transactions or the shipper could face heavy fines.
With the increased connectivity of ecommerce comes a certain degree of risk and a greater probability that businesses may be transacting with denied, sanctioned or restricted parties.
Proper screening is a difficult process to manually undertake. Continually staying updated on changing DPS data, an increasing number of global lists and entries, the broad requirements to screen commodities, services, and financial interactions, required logging and audit trails, as well as the heavy penalties levied for non-compliance, presents substantial challenges to companies and individuals.
A review of denied, sanctioned, and restricted parties, is required to minimize risk and lessen the potential of substantial fines. The scope of a comprehensive denied party screening system has expanded beyond traditional export compliance to include a range of factors and added complexity. Ultimately, companies require restricted party screening software that will enable them to manage DPS in a cost-effective way.
Descartes MK Denied Party Screening™ offers a web-based solution for companies looking to simplify their screening processes.
Comprehensive Global Database Denied Party Lists
Our comprehensive global database options to review denied or sanctioned party lists include the following and many other including:
- United Nations (UN)
- European Union (EU) Sanctions Lists
- Foreign Assets Control (OFAC) and multiple U.S. Government Lists maintained under the Office of Foreign Assets Control (OFAC)
- International Criminal Police Organization (INTERPOL) Wanted Persons List
- Australian Consolidated Lists
- Japanese Proliferation Concerns (METI)
Users can search multiple lists simultaneously using single or multiple fields to quickly locate the DPS-related information that best mirrors business requirements.
This solution is flexible and extensible to meet the needs of businesses as they grow. Companies can take advantage of additional content and functionality as they expand into new locations, lines of business or verticals. Services such as Descartes MK Dynamic Screening™ can be included to screen records proactively when a new export item is added or following changes to a denied party list; and Descartes MK Bulk Screening™ to batch screen existing or potential customers against our comprehensive DPS database.