Denied Party Screening Process: All You Need to Know

Assessing a potential business partner or client against rejected and penalized party lists to ensure that you are not breaking export control restrictions is known as denied party screening process (also known as Restricted Party Screening).

What Is Denied Party Screening Process? 

Denied and sanctioned party screening lists are used to 'screen' an organization's index of workers, consumers, suppliers, distributors, transactions, and data. Automated screening solutions like ShipDPS are often used for this denied-party screening purposes. The term "limited party screening" can also be used to describe a denied party screening process.

Companies should undertake a denied party screening process on every export transaction to verify compliance with export regulation. You can either manually verify all 140+ lists for each expert transaction or utilize software created expressly to streamline exporters' denied party screening process.

Compliance Best Practices: Identify a Denied Party Screening Process That Works for You

The denied party screening process typically consists of looking for matches between the names and addresses of the listed trade firms. Because the watch lists are susceptible to regular revisions that are immediately effective, screening is essentially a repetitious duty for most employees. When it comes to the time and type of the screening, the best practices in the business now advocate three fundamental methods.

Check out the three denied party screening processes:

1. Party-Based Screening: Screening of all business partners every time the restricted party lists are updated.
2. Transaction-Based Screening: Screening of only the relevant business partner(s) before each business opportunity and/or transaction.
3. Hybrid Screening: Screening of all business partners periodically in addition to the screening of the relevant business partners) before each transaction.

Since the most recent limited party lists should be utilized for each engagement, the denied party screening processcould be time-consuming and physically demanding. In situations when there are a significant number of trading partners, the use of a software solution is unavoidable.

Automated software typically has the capability of employing a "fuzzy logic" algorithm, which looks for names that are similar in sound or phonetic matches to account for variances in native alphabets and foreign entity lists, among other things.

Compliance Best Practice: Timing & Responsibilities of DPS Process

A complete overview of the best practices for when to execute screening and who is responsible to screen may be found in the following section. This framework should be tweaked to best suit the company's needs being evaluated and the operational functions within the same company being evaluated.

Here are the four major groups of parties/individuals that may require screening against denied party lists:

• Suppliers, service providers, vendors and subcontractors
• Customers, recipients of goods, financial institutions and brokers
• New hires, employees, visitors, contractors, consultants and agents
• Consignees, end users, pay-to/pay-from parties and freight forwarders

With further ado, let's dive into the four major groups of parties/individuals:

1. Suppliers, Service Providers, Vendors and Subcontractors

When should you screen? Before considering new service providers

Who is responsible for the screening? Purchasing, Procurement and/or Trade Compliance

2. Customers, Recipients of Goods, Financial Institutions and Brokers

When should you screen?

• Before considering new customers, recipients, and brokers
• Upon receipt of quote requests and purchase orders
• Before shipping/exporting

Who is responsible for the screening? Customer Service, Sales and/or Trade Compliance

3. New Hires, Employees, Visitors, Contractors, Consultants and Agents

When should you screen?

• Before hiring employees or decision to engage with other entities on list
• Before giving facility access to any of the above
• Periodically for existing employees and others engaged with company

Who is responsible for the screening? Human Resources, Security, Regulatory, and/or Trade Compliance

4. Consignees, End Users, Pay-To/Pay-From Parties and Freight Forwarders

When should you screen?

• Before invoicing and shipping processes for all parties named above
• Before making, transferring, or accepting funds
• Before making agreements with new brokers or freight forwarders

Who is responsible for the screening? Shipping, Receiving, Logistics, and/or Trade Compliance

Your Next Steps to Stress-Free Denied Party Screening Process

If you want to avoid compliance penalties, you need to run denied party screenings for every transaction regularly. Some restricted parties may fall through the cracks due to the denied party lists frequent updates.

How can you save your company from penalties then?  

It's easy! Your solution to this challenge is to automatically and continuously run denied party screenings at every shipping stage with a denied party screening software.  

If you’re looking for a denied party screening software that can do the work for your company with ease, then sign up for a product demo of ShipDPS.