15th April 2020

Sanctions Errors From European Regulator

Mistakes can be made at the highest levels for no discernible reason, this happened on 1 April 2020 when European authorities published incorrect sanctions updates.

We discovered this information internally using ComplyAdvantage proprietary tools that allow us to actively review incoming data. A service that not every compliance solution is able to deliver.

Trust, But Verify

When errors like this happen what matters is how compliance teams and compliance tools react. 475 entities were affected, having been given the summary information and the wrong designation date for sanctions.

The unfortunate outcome of this if it had slipped through, which it may have with other solutions, is that companies would have been screening transactions with incorrect data.

We work to make sure the data clients receive is always correct, even when the mistake is made by the authority issuing updates. We do this using our in-house Sanctions Manual Alert Review tool.

When we receive updates, our sanctions subject matter expert, Sergiu Capilnean, is able to examine them and prevent incorrect data from going out to our clients. And in this instance, the error was flagged to the relevant European regulator. Due to the severity of the issue, this is also signed off by other senior members of the data team. Your sanctions checks shouldn’t result in false negatives and with this process, we guard against them.

Official Corrections

The next day, 2 April 2020, the European authority had noticed the error and sent another update through with the correct summary information for the 475 entities. However, the designation dates were still incorrect. So we rejected the information once more. And then again later in the day when an alteration to the name of one entity was made.

It wasn’t until 3 April 2020 that the European authority was able to fully rectify both the summary information and the designation dates for all 475 entities concerned. At which point, once we knew the data was correct, we accepted the updates.

What Does This Mean For You?

Our clients are at the forefront of all our decisions. We would rather be slightly out of sync with official designations than have you operating with incorrect data. Unfortunately, this meant that we were unable to adhere to our 24-hour update timeframe. But that decision was made out of concern that clients would be making consistent errors for at least a day – in this situation, two days.

It’s unclear how the regulator will handle reporting requirements for these errors, but for those who have processed transactions while operating using faulty data, they will now need to conduct an internal review of all relevant transactions.

No matter the institution, this will take a great deal of time. Ordinarily, that wouldn’t be a huge issue, but we are not in ordinary times. Financial crime is on the rise and compliance teams are stretched thin as it is across the globe. Checking that they haven’t accidentally breached sanctions is a difficulty that is unneeded right now.

We will always strive to bring our clients the cleanest data, no matter at what stage errors are brought into it or what the source is.