What is a Specially Designated National (SDN)?
The Office of Foreign Assets Control (OFAC) publishes a list of individuals and companies that are either controlled, owned or acting for/on behalf of targeted countries as part of their mandate to combat financial crime and terrorist funding. This list includes the names of individuals, groups and entities designated under programs that aren’t country-specific, such as known terrorists and drug traffickers.
The individuals and companies appearing on this list are known as Specifically Designated Nationals or SDNs. Their assets are blocked, and there may be prohibitions related to dealing with them.
Financial institutions and other businesses should always perform an SDN check as part of their KYC process to meet their AML and CTF obligations.
What Is The OFAC SDN List?
The SDN List refers to the Specially Designated Nationals and Blocked Persons list maintained by OFAC. It is maintained by OFAC and identifies any persons or companies involved in activities that may threaten or undermine US foreign policy or national security objectives.
The list may contain the names of individuals, vessels, governments, entities and organizations.
What Is The Intention Of The OFAC SDN List?
The Specifically Designated Nationals and Blocked Persons list is published as part of OFAC’s efforts to prevent the misuse of the financial system for terrorist financing and money laundering.
US nationals are banned from transacting with any individuals or entities that appear on the SDN list. Any individual who provides support related to terrorism, drug trafficking or unauthorized military use to any person or entity appearing on the SDN list will be penalized under the US Patriot Act.
The US assets belonging to any person or entity that appears on the SDN list are frozen.
A PDF version of the SDN List can be downloaded from the Home Treasury website.
What is SDN List Screening?
Screening against SDN lists is mandatory across the globe. While trading with individuals and entities appearing on the list can have serious consequences for US nationals (and may be considered a criminal offence), it can also put trade relationships between countries at risk and forms an important part of regulatory compliance.
Businesses and financial institutions must carry out thorough SDN screening before establishing a relationship or carrying out international transactions with any individual or entity to ensure their compliance.
As sanctions and prohibitions may vary between jurisdictions, the most efficient way to ensure compliance is through automated screening technology. SDN lists are available publicly but require manual checks that may be cumbersome or inaccurate.
What Should You Do if a Client Appears as a Possible SDN Match?
If a client appears on an SDN list, it’s important to review all of the client identity information on file to rule out a false-positive identification. You may also request additional information from the client to verify whether the match was accurate. If it appears that the individual is indeed the same as the individual appearing on the SDN list, it should be reported to compliance officers, and the transaction should be suspended.
Businesses have an obligation to screen against SDN lists during onboarding, as well as during periodic KYC checks. For the most accurate and efficient results, it’s best to use a dedicated SDN screening tool that automates and simplifies the process. If you need assistance with SDN screening in your business, get in touch with sanctions.io. sanctions.io has the expertise and technology you need to stay compliant with international Sanctions regulations.