Sanctions screening of companies requires a different approach from screening individuals. A company may not produce a hit itself, while a real sanctions risk still exists through its corporate structure or transaction patterns.
Why screening companies is more complex than screening individuals
When screening a natural person, a direct name check is often sufficient. With companies, additional factors come into play:
- A company may not be sanctioned itself, while a shareholder or UBO is.
- Corporate structures with intermediate entities can obscure who ultimately has control.
- Companies regularly change their name, structure or ownership.
- Subsidiaries or affiliated entities do not always automatically share the sanctions status of the parent company.
What to look out for when screening companies
Ownership and control structure
Map out who the ultimate beneficial owners are and whether any of them is directly or indirectly sanctioned. Also look out for control without a formal majority interest, for example through special voting rights.
Country of establishment and activity
Companies based in, or with strong ties to, countries subject to broad trade restrictions call for extra attention, even if the company itself is not on a specific list.
Sectoral restrictions
Some sanctions regimes do not target individual parties but entire sectors, such as certain industries or types of services. A company can be restricted as a result, regardless of individual screening outcomes.
Transaction patterns
Unusual payment routes, intermediaries without a clear function in the chain, or transactions that do not logically fit the company's core activity may point to an attempt to circumvent sanctions restrictions.
A structured approach
Careful company screening usually consists of the following steps:
- Direct screening of the company itself against relevant sanctions lists.
- Mapping the ownership and control structure.
- Screening the identified UBOs and directors.
- Assessing the country of establishment and the sector in which the company operates.
- Assessing the transaction itself for unusual features.
Example from practice
An organisation wants to enter into a supplier relationship with a foreign company. The direct screening produces no hit. However, when the ownership structure is mapped, a minority shareholder with special control rights turns out to be on a sanctions list. Without this structural analysis, the risk would not have come to light.
Frequently asked questions
Is it enough to screen only the company itself?
No. A full assessment also requires screening of UBOs and directors, and attention to the country and sector in which the company operates.
How often should company screening be repeated?
Sanctions lists and corporate structures change. Periodic re-screening, tailored to the risk profile of the relationship, is advisable.
What if a subsidiary is not on a list itself?
Even without a direct listing, a subsidiary can still be affected by sanctions against the parent company or UBO, depending on the control structure.
TradeRisk carries out sanctions screening and risk assessments for customers, suppliers and business partners. Also read more about how sanctions screening works and what a UBO is.