Sanctions List Screening: Three Steps to Mitigate Risk

 

Stop Risks Before They Arise

For many SMEs, sanctions list screening remains an uncomfortable topic. It is often perceived as complex, legally charged, and difficult to integrate into daily operations. However, it has long since ceased to affect only exports or international corporations. The decisive factor is whether a company provides economic resources. This can apply to purchasing, IT, production, or services.

The EU publishes a consolidated list of persons, groups, and entities subject to financial sanctions. This list is relevant to all economic operators, regardless of industry or company size.

German authorities also make it clear that companies must establish suitable screening processes. The Federal Office for Economic Affairs and Export Control (BAFA) explicitly refers to the obligation to conduct research regarding person-related financial sanctions.

Where SMEs Encounter Risk in Daily Operations

In practice, violations rarely result from intent. More often, clear procedural checkpoints are missing:

• New business partners are entered into the system without being screened.
• No re-screening occurs before order release, even though sanctions lists can change.
• Payments are triggered without Finance having a quick check integrated into the workflow.
• If a "hit" occurs, documented proof is often lacking.

Foreign trade law does not demand perfectionism, but rather a traceable and verifiable process.

Three Proven Screening Steps for SMEs

A pragmatic approach involves anchoring sanctions list screening at three fixed points in the process:

1. First Contact: New customers, suppliers, or service providers are screened before they are processed further. This prevents problematic data from entering the master database in the first place.
2. Order or Approval: Since sanctions lists are updated regularly, a re-check shortly before the final decision protects Purchasing, IT, and Production from unexpected risks.
3. Prior to Disbursement: Before money is transferred, a final check is performed and the decision is documented. This step is particularly relevant for Finance and reduces liability risks.

The Deutsche Bundesbank points out in its fact sheets that documents related to planned business transactions should be systematically checked for sanctions-relevant indicators.

Technology as Support, Not a Hurdle

For these steps to work in daily life, they must happen where the work is done. Automated checks directly from existing systems avoid media breaks. Clear rules for resolving hits and clean logging ensure that checks remain traceable.

One solution that supports this approach is PYTHIA from classix.de. The software enables both real-time checks in daily business and regular batch screening of existing data, while ensuring full auditability. Features particularly relevant for SMEs include easy integration into existing systems and high match quality through intelligent search algorithms.

What Does This Mean for My Company?

Sanctions list screening does not have to be a massive project. Three clearly defined steps, anchored in the process and properly documented, are sufficient to significantly reduce risk. SMEs can thus create security without unnecessarily complicating their workflows.

Test PYTHIA here for free.

FAQ: PYTHIA

• Is sanctions list screening mandatory for our company? Yes. As soon as your company provides economic resources, there is an obligation to screen. This applies regardless of company size, industry, or export activity.
• Which business processes must be screened? All processes involving business partner contact. This includes creating new customers and suppliers, order approvals, and disbursements. Restricting checks to individual departments is insufficient.
• At what points in time must screening occur? At first contact, before every relevant approval, and before every payment. Additionally, regular screening of existing databases is required because sanctions lists change constantly.