Sanctions screening has become a crucial line of defence in the fight against financial crime, helping to prevent professional and financial services from being misused to fund terrorism, organised crime, or breaches of international law.
For lawyers, accountants, real estate agents, and trust and company service providers (TCSPs), it forms a central part of their anti-money laundering (AML) and counter-terrorism financing (CTF) responsibilities, claims Arctic Intelligence.
Given their gatekeeping roles in managing assets, structuring deals, and facilitating major transactions, these professionals are uniquely positioned to detect and block sanctioned entities from accessing the global financial system.
Sanctions are legal and regulatory measures imposed by governments and international bodies such as the United Nations (UN), European Union (EU), and the United States Office of Foreign Assets Control (OFAC). They target individuals, entities, and regimes linked to terrorism, human rights abuses, weapons proliferation, or corruption. Failing to comply with sanctions obligations can result in severe penalties — including multimillion-dollar fines, criminal charges, operational disruption, and reputational damage. For professional service providers, the consequences of overlooking a sanctioned client can be devastating both financially and ethically.
For lawyers, sanctions screening must be embedded throughout client and transactional due diligence. This includes verifying client identities against global sanctions databases, assessing cross-border cases for links to restricted jurisdictions, and ensuring litigation work does not breach sanctions rules. Representing or advising sanctioned individuals can expose firms to serious regulatory risk, even when the engagement appears limited to legal advice.
Accountants also play a pivotal role in sanctions compliance, given their access to financial data. They must ensure clients are not evading taxes, using offshore structures to bypass sanctions, or engaging in illicit transfers. During audits, accountants need to screen financial flows and flag any transactions tied to sanctioned entities. Their advisory work should similarly include monitoring the source and movement of funds.
In real estate, sanctions screening helps prevent the sector from becoming a vehicle for money laundering or sanctions evasion. Agents are responsible for screening both buyers and sellers, particularly in high-value or cross-border property transactions. Verifying the origin of funds used in purchases is a crucial safeguard against facilitating illicit financial flows linked to sanctioned individuals.
For trust and company service providers (TCSPs), the obligation extends to verifying the ultimate beneficial owners (UBOs) of corporate structures and trusts. They must ensure these entities are not being created to conceal the assets of sanctioned persons. Ongoing monitoring is essential, as ownership structures and sanctions lists evolve frequently, requiring constant vigilance.
Implementing an effective sanctions screening process requires a structured, risk-based approach. Professionals should use up-to-date sanctions databases, including OFAC’s Specially Designated Nationals (SDN) List, the EU Consolidated List, and the UN Security Council Sanctions List. Screening should be automated where possible, leveraging AI-powered tools that detect anomalies and flag potential matches for investigation. Enhanced due diligence (EDD) should apply to clients or transactions involving high-risk jurisdictions, complex structures, or politically exposed persons (PEPs).
Training and awareness programmes are equally critical. Staff must be equipped to recognise sanctions risks, interpret alerts correctly, and stay informed on evolving international frameworks. Regular monitoring of client relationships and prompt reporting of potential matches to regulators are essential to maintaining compliance.
However, sanctions screening is not without challenges. False positives can drain resources and delay legitimate business. Data protection rules, particularly under GDPR, complicate the sharing of sensitive information. Meanwhile, the rapid pace of sanctions changes requires continuous updates to systems and internal procedures. Smaller firms, in particular, may struggle with the cost and complexity of implementing advanced screening technologies.
Past compliance failures highlight the cost of inaction. Standard Chartered Bank was fined more than $1bn for breaching sanctions, illustrating the need for rigorous controls. In Canada, property purchases linked to sanctioned individuals exposed gaps in real estate due diligence, while the Panama Papers revealed how some TCSPs facilitated entity creation for sanctioned clients.
Ultimately, sanctions screening is a shared responsibility across the legal, financial, and property sectors. By combining strong compliance processes, advanced technology, and continuous monitoring, professionals can not only protect their firms from legal and reputational harm but also contribute to safeguarding the integrity of the global financial system.
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