12 Steps to Optimize Your Denied Party Screening Program

Every business, across all industries, faces an enormous regulatory and compliance burden unlike at any other time in history.

For most, complying with international trade regulations and managing denied party screening activities comes with several challenges. These include poor data quality, vast amounts of information that requires processing, limited visibility as a result of disjointed and siloed processes amongst others. The complexity is compounded by constant emergence of new sanctions and heightened regulatory focus in areas like Uyghur Forced Labor Prevention Act (UFLPA), Russia sanctions, Military End User (MEU) regulations, OFAC 50% Sanction Ownership rule, to name a few.

When carrying out compliance activities with outdated tools and workflows, the risk of a poorly executed denied party screening operation can lead to sanctions violations and its associated costs including hefty monetary penalties, reputational damage, uninvited audits, license suspensions, and even forced closures. Additionally, the immense resources required to manually perform screening activities makes leaders and compliance professionals hesitant to do certain tasks, thus their practice becomes sporadic leaving the organization exposed to even more risk.

In This Article:

Prioritize Denied Party Screening
Know Your Sanctions Risk Exposures
Select or Transition to a Solution that is Fit for Purposes
Streamline and Automate Compliance Processes
Ensure Data Quality
Centralize Visibility and Audit History
Integrate Across Business Units and Processes
Maintain a Schedule to Frequently Screen for Denied Parties
Keep Up with Regulatory Changes
Adopt a Strategy to Continuously Minimize Your False Positive Rates
Provide Regular and Timely Training
Partner with an Experienced Denied Party Screening Vendor

To overcome these challenges, organizations must achieve a mastery of their sanctions compliance function with the right combination of denied party screening processes and software capabilities that deliver efficiency and efficacy in complying with regulatory obligations, comprehensively protecting the business while improving customer experience, and delivering value—especially reduced administrative burden for employees and less friction for all stakeholders. Traditional tactics are simply incapable of meeting this mandate.

If your compliance goals seem out of reach or your performance seems out of touch with your threat landscape, written below are 12 key areas of focus for driving innovation, improving efficiency, and optimizing your sanctions compliance program. Alternatively, you can watch a summarized version in this video.

Video: 12-Step Guide to Optimizing Denied Party Screening

1. Prioritize Denied Party Screening

Denied party screening helps organizations avoid prohibited business relationships. While not legally mandated, the absence of a denied party screening process is viewed very negatively by regulatory agencies and attracts high monetary penalties in enforcement actions.

How to help your organization make denied party screening and trade compliance a priority:

Select a trade compliance champion: an effective approach must be directed from the top. The compliance champion plays a critical leadership role in setting the tone across the organization, providing valuable oversight, and helping to empower employees with all the resources they need to practice screening and other compliance activities consistently.
Get stakeholder buy-in: demonstrate how compliance can be an enabler rather than a hurdle to executing their responsibilities. For example, sales executives who screen potential leads early on save wasted effort from pursuing a prospect that they cannot legally sell to.
Invest in denied party screening software: without technology to simplify and speed up elements of compliance activities, staying compliant can be overwhelming.

2. Know Your Sanctions Risk Exposure

Consider your organization’s exposure to sanctions risk as broadly as possible in order to cast a wide net of protection against violations and enforcement risks.

How to analyze your risk profile and determine the who, what, where, and when in your process to screen:

Identify the risks that exist across your organization by understanding which sanctions / regulations apply. Factors to consider include your industry, regions where you operate, your business model, goods/services, currency you transact in (for instance non-U.S. companies are subject to U.S. OFAC sanctions if they transact in USD), jurisdiction of your third-party relationships, including employees.
Classify the risks you have identified in terms of probability of occurring and the severity to which they will impact your business. Then rate them in order of priority from high to medium to low. This will guide what compliance activities and functionalities take precedence.
Quantify gaps that may exist in your administrative structure to facilitate evasion of sanctions and other non-compliant activities that may enable denied parties to slip through the cracks.

In addition to knowing who to screen, when to screen, what sanctions lists to screen against, a solid grasp of your vulnerabilities and compliance obligations will help you build or strengthen your denied party screening process. Learn more about the sanctions compliance requirements for major industries, here.

3. Select or Transition to a Solution that is Fit for Purpose

Have a checklist of industry recommended features as well as the functionalities that are important to your business. (Step 2 above will provide some of the answers you need).

How to ensure your denied party screening software is right for your organization:

Check for configurability: A solution that is configurable offers the flexibility to adjust to your screening needs. We have seen organizations start with online ad hoc screening when their data volumes are low or screening needs are infrequent, then progress to batch / bulk screening or move to integrated screening and automatic rescreening as their risk profile demands.
Give importance to usability: features like ease of use, ease of adoption, and ease of set up are vital to ensuring the system gets used by internal stakeholders as well as achieve faster time to value.
Insist on adaptability: regulations change, and businesses evolve. Ask your vendor to demonstrate the software’s ability to adapt. You do not want a solution that limits your due diligence efforts in the future, requiring another software purchase, or introducing manual processes to cover for the limitation.

To successfully implement a denied party screening solution, it is crucial to have your internal IT team involved in the process at the beginning. It is not uncommon to have compliance software projects derailed or changed completely because IT resources were not engaged in discussions about the solution from the start.

4. Streamline and Automate Compliance Processes

Errors are endemic to manual processes and legacy systems. The goal is to minimize and prioritize human participation in denied party screening to only essential high-level activities, such as analyzing information to provide strategic insight and drive corrective action. These rely on skill and expertise, rather than time consuming data gathering and other mundane tasks, which are a misuse of the talents of highly paid compliance professionals.

How to streamline screening activities to reduce administrative burden and amplify efficiency:

Get the core foundations right by charting your ideal workflow to capture what happens when a sanctions list search returns positive / potential matches. Define a clear review, escalation, and monitoring path.
Document the specific deficiencies and pain points in your current procedures. Simply knowing that the process is inefficient is not enough, you should be able to identify the root cause of productivity pitfalls in your compliance program. Speak to team members who perform these tasks daily and take note of major concerns / complaints. Clearly defining and documenting the existing issues helps in communicating the importance of the solutions you propose.
Amplify efficiency by selecting a robust denied party screening software that provides compliance workflow management features that are configurable to your processes and are able to terminate any unnecessary steps that slow your compliance processes.
A modern user-interface with activity-driven prompts that facilitate and accelerate the completion of compliance activities.

5. Ensure Data Quality

Efficient denied party screening depends on accessible, reliable, and comprehensive information. Data errors and quality issues such as lack of completeness and consistency create non-compliance and increases the cost of denied party screening by generating high rates of false positive, as well as missing genuine restricted parties.

How to prepare screening data for better accuracy:

Deduplicate data: your business systems should provide a complete record of entities to be screened without having pieces of information spread in disparate locations. A duplication prevention tool may prove helpful in automatically resolving this problem.
Have controls in place to standardize the way information is recorded, such as first name / last name, dates, and addresses.
Take note of delays in capturing data within your business operation. For example, is there a lag between when new hires are onboarded and when the information is available for screening?
Avoid manual data entry as much as possible within your systems. Use automatically populated values where feasible.
Monitor, cleanse, and validate data records periodically. It is vital to have in place a strategy to manage sanctions screening data from internal sources such as customer information, transactions data, and other business specific information, as well as external sources such as sanctions lists, ownership structures, and adverse media.

6. Centralize Visibility and Audit History

A clear audit trail provides a central, unified view of an organization’s compliance posture. As a single source of truth, it gives comprehensive visibility into compliance activities and auditable proof of your due diligence efforts.

How an effective audit trail improves and demonstrates compliance in a timely manner:

A software solution with configurable, automated capabilities for investigating, clearing, or escalating potential hits improves accuracy and speeds up the review process.
Exportable reporting and analytics of risk and compliance activities helps the compliance function easily identify bottle necks and quickly pinpoint inefficiencies to address.
A single source repository gives easier oversight of due diligence activities across the company with dashboard visualization to help leadership make informed compliance decisions.
Greater process transparency with solutions like Compliance Manager Workflow. Organizations with extended, geographically dispersed teams and multiple stakeholders, can achieve centralized and consistent screening in one place with clear visibility of who is doing the screening, adjudication, and why a decision was made.
Automated recording of screening details confirms if regular screening is happening across the organization.

7. Integrate Across Business Units and Processes

Integrating denied party screening into business processes is a great way to strengthen the alignment of the company’s objectives with the goals of a compliance program. As a risk mitigation strategy, connecting all parts of the business into a denied party screening platform improves the organization’s ability to proactively identify sanctions compliance risks through consistent and automated processes for recognizing, reviewing, resolving, and reporting. A recent Descartes industry survey of compliance professionals reveals that of those who integrated denied party screening into their business systems, up to 98% experienced a reduction in risk, an increase in efficiency and time savings, and achieved comprehensive compliance coverage through consistent screening.

How to strengthen your compliance infrastructure with integrated denied party screening:

Map out the various processes where screening needs to happen according to your risk appetite (refer to step 2 above for more details). Typical business processes that are integrated with denied party screening include customer onboarding, recruitment, order fulfilment, invoicing, shipping and logistics, procurement, etc.
Take stock of the business systems you have in place which can support integrated screening such as CRM systems, ERP, Ecommerce, Visitor Management, etc.
Ensure your denied party screening vendor / solution is platform agnostic, meaning it has the capability to integrate with a wide variety of business software, from popular brands like Salesforce, NetSuite, Oracle, Microsoft Dynamics and SAP to homegrown and even legacy systems.
Screen all historical data. Prior to turning on the integrated solution, ensure all data that may be present in an ERP, CRM or any pre-existing business system is rescreened. This database of entities may have been screened through a different system or may have never been screened at all. But by performing an initial batch screening, it ensures there’s no real gap of missing potential matches to denied parties. The integrated solution will pick up anything new going forward, through automated rescreening.

8. Maintain a Schedule to Frequently Screen for Denied Parties

The sanctions and regulatory landscape is quick to change, as such the risk profile of your customers and contacts can evolve. This necessitates having in place a screening frequency that matches the volatility of your business climate. To optimize your compliance efforts, confirm that your solution/vendor can provide flexible screening methods that correspond with your needs.

How to prepare a schedule for automated and recurring denied party screening:

Start with a clean slate. Ensure you can screen all customers, contacts, and leads at the beginning of a business relationship. This may require bulk/batch screening to take care of entire databases whether on a historical basis, or at the point of an acquisition.
Plug your denied party screening procedures into your daily business process in order to screen your customers / contacts at the onboarding stage. Integrated screening (which we discussed in step 7) is especially effective in ensuring this happens automatically.
Have a solution with dynamic screening features such that it rescreens the entire database at a frequency that matches your risk profile. A robust system should be able to run in the background daily, to make certain that you are always compliant.
Mobile capabilities should be part of your denied party screening software so that employees can quickly perform on-the-fly screening in the field such as at sales meetings, on business trips, events, and conferences, as well as logistics operations etc.

9. Keep Up with Regulatory Changes

Regulations and sanctions are dynamic. They can change and evolve daily, especially with current volatile geopolitics. If you have a denied party screening software, your vendor should provide as part of its offering, real time updates to sanctions lists.

Additionally, you can proactively stay on top of emerging sanctions and regulatory changes by:

Signing up for updates from regulators, sanctioning bodies, and related agencies. Information is often released through multiple channels including social media.
Subscribing to a restricted party data vendor for a fee can provide timely alerts on any additions, deletions, or modifications to sanctions lists.
Receiving intelligence updates for free through your denied party screening solution provider. Descartes distributes regulatory updates, new sanction regimes, and changes to denied party lists via an email newsletter each week to customers.
Staying current with sanctions compliance issues and trends by reading industry studies /publications /articles, attending conferences, and networking with industry professionals.

Ensure to review internal processes to follow up with regulatory changes where necessary. Look for potential gaps in the current system that may not align with the new requirements. Consult experts within your field including your denied party screening vendor for a clear understanding and accurate interpretation of any sanctions or regulations. Companies have received hefty fines for sanctions violations resulting from such errors.

10. Adopt a Strategy to Continuously Minimize Your False Positive Rates

A degree of false positives is expected in denied party screening, however, the inability to minimize or correctly manage them threatens the efficiency of your compliance program. To effectively improve the accuracy of your denied party list search and reduce the rate of false positives, you need a combination of high-quality data, robust screening technology, and expert knowledge on the vendor side as well as your internal compliance team.

How to prepare an approach for managing false positives:

Improve the quality of your data for completeness, accuracy, and relevance.
Tune your search filters to match the quality and structure of the data you are screening.
Plan for periodic testing and calibration of the search engine to include regulatory updates or organizational changes, such as business acquisitions in new regions.
Benchmark the rate of false hits against other organizations in your industry.
Have a denied party screening vendor with a team of experts to help fine tune your strategy.

We provide more insights into managing false positives in denied party screening, here.

11. Provide Regular and Timely Training

Staying on top of compliance risks means knowing the regulatory landscape that applies to your specific industry and the frameworks for complying. Stakeholders need to understand the compliance policies in place and how to implement them in their day-to-day activities.

How to improve your organization’s compliance literacy and get the most out of your denied party screening solution:

Provide frequent compliance training and awareness programs that are designed around your policies and procedures.
Additional resources, and education should be offered by the denied party screening software vendor you select. They should give periodic guidance on how to use the software including when upgrades / changes are made to regulations, screening technology, and industry best practices.
Easy to access knowledge centers, educational events, and seminars are a great way to help employees continue to evolve their understanding of compliance best practices and see how others in the industry navigate similar regulatory obligations.

12. Partner with an Experienced Denied Party Screening Vendor

For your denied party screening process to perform optimally, it should be understood that it requires more than just the ‘screening technology’. Your vendor partner plays a pivotal role in the success of your compliance program. It is essential that you have a provider that can deliver the solutions you need today as well as the future. If you are starting your compliance journey for the first time, that experienced vendor can be especially helpful in working with you to define your screening configuration based on industry best practices and their broad expertise. And most likely they will have worked with organizations in your industry before and as such can easily understand your business needs.

On the other hand, if you are moving to a new system from an underperforming one, they will easily identify errors made in the past and help you strengthen your compliance program going forward.

How to select a good denied party screening vendor to boost the efficacy of your compliance activities:

Know what red flags to look out for and avoid.
Read verified third-party review sites like G2.
Learn how to effectively compare denied party screening vendors against metrics that matter.
Look into their history to see how long they have been in the industry and if denied party screening / sanctions compliance is a core focus of their business.
Confirm that the vendor has a strong internal team of compliance professionals and global sanctions content researchers.

Descartes Denied Party Screening Can Help Optimize Your Sanctions Compliance Program

Make no mistake – having a denied party screening program and getting the process right, is critical and urgent in today’s regulatory environment. Descartes offers restricted party screening and global trade intelligence technologies to help you realize the performance excellence you envision for your organization. Our broad sanctions compliance knowledge and deep industry expertise allows us to develop, implement, and manage robust denied party screening solutions that protect your business and support growth.

Descartes Visual Compliance and Descartes MK solutions are flexible and modular, allowing organizations to pick the specific and exact functionality and content they need for their particular compliance needs and scale up later as and when necessary. Also read what our customers are saying about Descartes Denied Party Screening on G2 – an online third-party business software review platform.

Ready to optimize your denied party screening and international trade compliance practices? Contact us today to speak to an export compliance specialist. You can also read this essential buyer’s guide to denied party screening to help you select a solution that fits your needs.

We Answer Your Questions About Denied Party Screening