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Keeping pace with changing political and diplomatic posture can be challenging for the due diligence manager responsible for monitoring business relationships. Sanctions have become a common tool in international diplomacy. “Hit ’em where it hurts” most often means impacting commerce, and governments are becoming more comfortable using sanctions and other restrictions to effect short-term leverage. The question for global business: How do we keep pace with sanctions that may appear (and disappear) with increasing frequency?

Traditional sanctions and watch list tools rely on manual intervention to update millions of records. The very nature of the process builds-in delays of days, weeks, or even months. Which is worse? Doing business with a Chinese bank recently placed on a sanctions list, or losing a billion dollar deal because someone mistakenly thought the bank was still on the list after it had been removed? Blackstone’s Formulation for the judiciary says it is better for 10 guilty persons to go free than for one innocent person to be imprisoned. Some may apply that algorithm to their risk-based screening policies. Here’s another option: Include fresh data in your sanctions screening that does not rely on manual intervention, so that the inclusion or exclusion can be verified accurately in every situation.

It may not be long before some of these Chinese and Russian individuals and businesses help the US and others stem the tide of weapons development in North Korea. They will be rewarded with a removal of sanctions. Make sure you are in the know when that happens.

  • The U.S. Treasury Department on Tuesday placed sanctions on Chinese and Russian individuals and firms it said had conducted business with North Korea in ways that advanced its missile and nuclear weapons program.
  • The sanctions against 10 companies and six individuals are designed to disrupt the economic ties that have allowed Pyongyang to continue funding its missile and nuclear program despite strict United Nations sanctions prohibiting it.
  • Though Beijing has tried to restrict transactions and supported an escalating series of U.N. sanctions, many Chinese companies continue to do business with the regime by supplying technology and hardware for its missiles.
  • The new sanctions were predominantly against Chinese companies that have dealt with North Korea by purchasing and selling coal, oil and mineral resources, or provided banking services that made the transactions possible.
  • The sanctions also hit two companies that arranged for North Korean laborers to build statues in foreign countries. Overseas labor is a source of revenue for the North Korean government, and the Treasury Department contends some of the laborers’ income helped finance the ballistic missile testing.

The sanctioned entities and individuals appear in the WorldWatch Plus Watch Lists and Sanctions data product for AML and KYC compliance.

Read the full article at: www.washingtonpost.com

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