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Sanctions list check: definition & importance for purchasing
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What is a sanctions list check?
The sanctions list check is a legally prescribed process for checking business partners against international and national sanctions lists in order to identify prohibited business relationships.
- In today's globalized business world, an indispensable tool for complying with international trade regulations and avoiding legal violations
- Objective: to comply with legal regulations, minimize financial risks and protect the company's reputation
Contents
Background:
After the attacks of 11 September 2001, the European Community issued regulations naming persons or organizations to whom no money or other resources may be made available.
These regulations leave open the question of how this is implemented and ensured in practice. It is therefore important for companies to set up clear processes and use supporting resources.
Who is obliged to check against sanctions lists? Every company based and operating in the EU
How and where can you check?
- The sanctions lists can be viewed on the federal and state justice portals or the EU Sanctions Map
- Manual checking with these websites takes a lot of time
- Alternative: Compliance software that automatically compares the master data of business partners (e.g. suppliers) with the constantly updated sanctions lists
Significance for purchasing
In the procurement process, the sanctions list check plays a decisive role in the legal and operational security of the company.
- Supplier management: Ensuring no business relationships with sanctioned parties
- Continuous review: building trustworthy supplier relationships and strengthening risk management in purchasing
Goals:
- Legal certainty: avoiding violations of national and international sanctions
- Risk minimization: protection against financial losses and criminal consequences
- Reputation protection: Safeguarding reputation by acting responsibly
Sanctions list check: from manual check to compliance automation
Sanctions list checking is a critical process to protect companies from legal risks and reputational damage. In practice, the need for a more efficient and reliable approach is becoming clear, as manual processes can no longer meet the increasing demands. The transformation to automated solutions is therefore a crucial step for modern companies.
Traditional approach: Manual sanctions list check
- Compliance employees manually compare the data of business partners with the current sanctions lists
- Requires a lot of time and is prone to human error (especially due to the constantly updated and extensive lists)
- Individual checks delay new business
New: Compliance Automation
- Automated sanctions list check using modern systems
- Integration into master data management systems
- Artificial intelligence and machine learning improve accuracy and reduce false alarms
- Time savings, minimization of human error and seamless document verification of all inspection processes
Practical example: Automated testing at a logistics company
An international logistics company implemented an automated compliance solution for sanctions list checks. Within a year, the company was able to reduce the checking time by 60%. At the same time, the accuracy of the checks increased, allowing potential violations to be detected and prevented at an early stage. This led to cost savings of over 400,000 euros per year and strengthened the confidence of business partners in the stability and legal certainty of the supply chain.
Conclusion on the sanctions list check
The sanctions list check is an indispensable tool in modern purchasing that ensures legal security and minimizes business risks. Through systematic implementation, continuous monitoring and the use of modern technologies, companies can effectively meet their compliance requirements while building trusting business relationships. The trend towards automated, AI-supported solutions will further increase the efficiency and reliability of audits, underlining the strategic importance of this process.
