From the course: The ABCs of the Banking and Insurance Business: AML, KYC, the NAIC, IFRS, and More

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Sanctions and prohibited transactions

Sanctions and prohibited transactions

From the course: The ABCs of the Banking and Insurance Business: AML, KYC, the NAIC, IFRS, and More

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Sanctions and prohibited transactions

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- [Instructor] Economic and trade sanctions are tools used by governments and international bodies to influence the behavior of individuals, entities, or countries. For example, the US Treasury's Office of Foreign Assets Control, or OFAC, enforces sanctions targeting specific countries and regions, and individuals and organizations involved in terrorism, drug trafficking, or other illicit activities. Sanctions lists, like OFAC's Specially Design Nationals List, or SDN List, help financial institutions identify entities they are prohibited from doing business with. To comply with sanctions, banks use automated screening systems to review customer names during onboarding, and to review transactions for connections to sanctioned entities or regions. If a match is found, the transaction is flagged and the bank must take further steps to determine if it's truly prohibited. When a transaction is confirmed as prohibited, it must be reported to the relevant regulatory body, such as OFAC. In…

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