List Screening
What is List Screening?
List screening is the process of identifying individuals, companies, or organizations appearing on various watchlists, such as politically-exposed persons (PEP) lists, sanctions lists, and adverse media lists. The goal of list screening is to locate potential risks and threats that are connected to the screened people or organizations, so you can lower the risk of sanctions.
PEP, Sanctions Screening, and Adverse Media
One of the main reasons to screen anyone involved in the shipping process is to minimize one’s exposure to sanctions risks. The best sanctions screening solutions use advanced technologies, such as artificial intelligence (AI) to identify potential matches between the screened entities and the sanctions lists. These solutions also provide real-time alerts and customizable risk assessments to facilitate compliance with regulatory requirements.
The three main types of screening lists are:
- Politically exposed persons (PEP): PEPs are people who hold prominent public positions, such as government officials, diplomats, and senior executives of state-owned companies. These people are considered high-risk due to their possible involvement in scandals, corruption, bribery, and other illicit activities. It is essential to screen all relevant stakeholders against PEP lists to ensure compliance with AML and CTF regulations.
- Sanctions screening: sanctions are measures enacted by local or international government agencies to restrict certain activities, such as trade, investment, or financial transactions, with specific countries, entities, or individuals. Sanctions can be imposed for various reasons, such as human rights violations, terrorism, or nuclear proliferation, among others. Failure to comply with sanctions regulations may result in severe penalties, such as fines, reputational damage, or even criminal prosecution. Working with individuals or organizations that are under sanction can result in fines, or jail time.
- Adverse media: these lists contain information about entities that are associated with negative news, such as corruption, fraud, or environmental violations. Screening against adverse media lists can help companies identify potential reputational risks and avoid association with organizations and individuals that have a history of non-compliance or unethical behavior.
The Importance of List Screening in the Shipping Industry
List screening is crucial for the shipping industry for several reasons:
- This global industry involves complex and diverse supply chains. These supply chains may involve various players from different countries, which increases the risk of exposure to sanctions, PEPs, and adverse media entities. List screening can help companies identify and mitigate such risks.
- It is a high-value industry with large financial transactions involving groups and organizations around the world. These transactions are vulnerable to money laundering and terrorism financing risks, which can result in severe legal and reputational consequences (not to mention eventual violence and political upheaval). By conducting due diligence, companies can avoid sanctions and ensure they are compliant with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations,and avoid exposure to financial crime risks.
- The shipping industry plays a crucial role in maintaining the global economy. Any disruption to the standard routine, such as a terrorist attack or a cyber-attack, can have major implications on global trade and supply chains. List screening can assist companies in identifying potential security risks and to take appropriate measures to prevent such threats.
- Russia’s invasion of Ukraine was a case study in how critical list screening is. Companies were so apprehensive of being caught doing business with compromised entities that they went beyond the letter of the law and complied with “moral sanctions”!
Ami Daniel, CEO and Co-Founder of Windward, explained in Business Insider. “Historically, companies have done the minimum amount of sanctions. However, what we’ve seen in the last month is a lot of companies do the maximum. The shipping industry hasn’t seen moral sanctions like this ‘ever in the history of mankind. Companies like Nike or Apple or IKEA pulled out of Russia, saying it’s immoral to make money with Russia and support Putin’s work.” With sanctions getting more entrenched and complicated, list screening via AI has never been more important to help the maritime industry increase efficiency.
The Role of AI in List Screening for the Maritime Industry
As the maritime industry faces increasingly complex regulatory requirements, the use of AI in list screening processes has become more widespread. The benefits of using AI technology include identifying potential matches with greater accuracy and efficiency, thus reducing the risk of false positives and ensuring compliance with regulatory requirements.
One of its most significant advantages when it comes to list screening is its ability to scan all the list types in minutes. By analyzing vast amounts of data, AI algorithms can quickly identify patterns and trends that may not be immediately apparent, allowing for more effective risk management and compliance.
List screening via AI can streamline the process and reduce costs. While traditional screening methods require significant manpower and time to review and cross-reference data manually, AI algorithms will perform this task much faster and more accurately. This will help shipping companies to improve operational efficiency and lower the risk of sanctions violations.
