Small businesses face a daunting array of regulations, and the penalties for failing to comply can be severe. One of the most critical yet often overlooked areas for small business owners to monitor includes compliance with anti-money laundering (AML), know your customer (KYC), and anti-bribery laws.
Here are reasons why businesses of all sizes should monitor their peps sanctions compliance, maybe with the help of peps and sanctions monitoring software that can automate the entire monitoring process.
Sanctions Violations Can Result in Serious Punishment
Sanctions violations can result in severe penalties, including extensive fines and even criminal charges for individuals involved in willful violations. One such example is the Industrial Bank of Korea which will have to pay $35 million in fines to settle money laundering charges for allegedly violating the New York state laws.
To avoid this, you need the best adverse media screening software to avoid such hefty fines. One of the best features of this software is that it can monitor media coverage, which might be a significant compliance risk for specific industries or companies.
Having PEPs in your database does not reflect well on your business. If it ever got out that you were doing business with known criminals, terrorists, or sanctioned persons, it would create a PR nightmare for you.
Imagine the headlines! “Local Business caught doing business with Terrorists!” Or “New York store caught selling to wanted cartel boss!” These types of headlines could tarnish your brand and reputation forever with customers.
PEPs and Sanctions Are a Global Issue
Every year, thousands of entities get added to the OFAC list. One way to stay aware of this is by using software that can monitor your company’s PEPs and sanctions compliance. It will give you instant alerts when it finds any new listings or risk factors associated with your company’s code.
This is essential for keeping your company out of trouble and ensuring that you don’t break any laws in the process. Peps and Sanctions Monitoring Software automates your compliance efforts by letting you know who you can do business with and who you should avoid.
Banks Are Responsible for Monitoring All Customers
Banks are responsible for monitoring all of their customers, including small businesses and sole traders, for ensuring compliance with anti-money laundering regulations. The bank must determine whether a customer might be PEP and whether they are residents in a country subject to sanctions or embargoes.
If a person or entity falls into one of these categories, the bank must take additional steps to ensure no risk of money laundering or sanctions breaches.
Avoid Being Blacklisted
Being blocked by financial institutions and partners can have a devastating effect on a company’s survival. Peps and Sanctions Compliance Software or the best adverse media screening software is so important.
It allows the company to monitor its compliance with international sanctions and other issues such as illicit financing, terrorist financing, and export restrictions. Small businesses need to be especially vigilant about this because of their smaller size and lesser resources for compliance monitoring.
Save Your Company from Bad Employees
Businesses must screen potential customers against the PeP database to ensure they are not doing business with someone who may have links to corruption. But PePs are not limited to your customers and should also be screened against your employee database.
The Bottom Line
The cost of non-compliance is rising, but the cost of compliance is going down. Companies can no longer afford not to monitor their customers, employees, investors, and vendors for potential risks, as fines for non-compliance, are increasing every year. Whether or not your business falls under any regulatory guidelines, it’s still crucial for you to know about these high-risk groups so you can avoid doing business with them.