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How to avoid financing war and money laundering

Due to global instability, the expectations for companies to know their business partners and ensure compliance with laws are rising. Concepts like ESG (Environmental, Social, Governance), compliance, and KYC (Know Your Customer) are becoming more established in the Finnish market. The war in Ukraine has particularly increased the need for companies to review their compliance processes and check customers and suppliers against international PEP and sanctions lists.

For companies subject to the Money Laundering Act, screening customers against international lists is familiar, but global unrest has expanded this need. Navigating current requirements and regulations is challenging, as is keeping track of affected companies.


Many companies, not just those directly under the Money Laundering Act, need to monitor their KYC process to avoid agreements with entities on international sanctions lists. At Asiakastieto, we see a greater need for our customers to check their customers, suppliers, subcontractors, and partners,” says Teemu Kettula, Product Owner for Nordic Compliance at Asiakastieto.

 

Using the right sanctions lists is crucial

 

There are many international sanctions lists, making it difficult to know which to check. Asiakastieto screens against five lists in one go: EU, UN, OFAC-C (USA), OFAC-S (USA), and the UK. It is possible to screen entire customer portfolios or all suppliers quickly for agreements or major transactions, or to map risks due to EU requirements.


Entering agreements with parties on sanctions lists not only breaks rules, leading to fines and imprisonment, but also risks financial loss. “Banks are strict on compliance and stop transfers if they suspect the recipient is sanctioned,” Kettula continues.

 

Sanctions lists help combat money laundering, terrorism, and war financing

 

International sanctions are crucial for peace, security, democracy, and human rights. The latest ESG and EU sustainability requirements show companies must not only follow laws but also act ethically, avoiding business with entities that finance war and terrorism.


As requirements strengthen, companies’ awareness of their responsibilities increases. It is about compliance, building trust, acting sustainably, and finding efficient processes for due diligence. Our customers need to take responsibility and have efficient processes to regularly check their business contacts,” Kettula concludes.


Written by Jenny Heinonen - Asiakastieto

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