Latest Sanctions Screening Audit Results

As a licensed financial institution, Clear Junction is dedicated to ensuring we uphold our responsibilities, especially those regarding facilitating payments on behalf of our clients. Here, we share some of the results of our latest audit, which specifically focused on sanctions screening.

Here at Clear Junction, we take our responsibilities as a licensed financial institution extremely seriously. As you would expect, ensuring that any payments and transactions we facilitate or make on behalf of our clients are above board and in line with regulations, is of primary importance. With that in mind, we have a dedicated team of ACAMS-qualified experts who work tirelessly to conduct rigorous and appropriate AML and KYC checks, as well as stringent compliance procedures.

WHAT IS SANCTIONS SCREENING?

Sanctions screening is a term denoting the controls that financial institutions put in place to ensure they can effectively detect, prevent and manage sanctions risk. Put simply, sanctions are restrictions imposed by governments and international bodies on certain types of transactions, economic activity or trade with targeted countries or persons as a tool to achieve foreign policy or national security goals.

The world changes at such a rapid rate these days, that the sanctions lists that governments create are constantly being updated. New countries and persons are added to the lists relatively regularly, especially when used as a tool for political foreign policy. It is therefore essential that financial institutions do everything they can to ensure they are abreast of any developments that sanctions lists undergo.

Clear Junction is no exception and we therefore recently employed an external firm to conduct a comprehensive analysis of our sanction screening methods and procedures to ensure they are fit for purpose.

SANCTIONS SCREENING AUDIT

We have successfully passed our last three annual financial crime audits and recently consulted with a world-leading audit firm within the industry. The main objective of this most recent audit was to determine the extent to which the procedures we have in place are effective for sanctions screening. We were delighted to learn that we were given a ‘green rating’ of 85.47%, indicating a high level of compliance and clear evidence that we meet the regulatory requirements.

In response to the audit, our CEO, Dima Kats, said: “One of the cornerstones for the long-term success of any licensed financial institution is a high level of attention paid to due diligence and compliance procedures. Since our inception, we have insisted on an exceptionally high standard of compliance, and sanctions screening is an essential part of that. It was therefore extremely satisfying to receive the results of this latest audit. We are only as good as the procedures we have in place and there is always room for improvement – so we will strive to continue developing in-house procedures to maintain and improve on our current levels.”

MOVING FORWARD FROM THE AUDIT

The results of the sanction screening audit are especially welcomed in light of the recent announcement from the Office of Financial Sanctions (OFSI) concerning a monetary penalty that was issued to Clear Junction a little over a year ago. The penalty was for a small number of transactions (total value £7706.38) we facilitated in 2018 which were found to be to consumer accounts held with the Russian National Commercial Bank (a sanctioned entity which was not a partner of Clear Junction). This happened inadvertently because of a defect in our sanctions screening tool which failed to identify and prevent these transactions.

We were, of course, disappointed to learn that this had happened and took steps to resolve the situation once it had arisen. We recognise that we made a mistake. However, we are pleased to report that we have learned and grown from the experience and have improved our internal methods and procedures. Although the incident took place a number of years ago, we want to keep it in mind as a constant motivation to strive for high standards of compliance within the business.

Since then, we have made tremendous efforts to upgrade our regulatory controls around screening of clients, customers and their transactions. We have tripled the size of the team dealing with those tasks and have also implemented numerous checks using our own platform and integrated it with a world-leading external provider.

Ultimately, we have better processes, controls and policies in place now because of the mistake we made and the results from the latest sanctions screening audit serve as testament to that.