Sanctions & Compliance Guide
A practitioner's reference for cross-border sanctions screening and trade-based money laundering (TBML) red flags. Screen every party, asset and route - not just the counterparty.
Golden rule: a sanction attaches to a name, a vessel, a port, or a good - never assume screening one axis clears the transaction.
This guide is educational; it is not legal advice. Screen using an authoritative provider (Dow Jones Watchlist, Refinitiv World-Check, LexisNexis Bridger) before executing any transaction, and document your screening result for audit.
Major sanctions regimes
| Regime |
|---|
OFAC US OFAC - Specially Designated Nationals (SDN) |
EU EU Consolidated Financial Sanctions List (CFSP) |
UN UN Security Council Consolidated List |
UK UK OFSI Consolidated List |
CH Swiss SECO Sanctions |
Screening checkpoints
- • Applicant / Buyer
- • Beneficiary / Seller
- • Ultimate Beneficial Owners (UBOs) ≥25%
- • Directors and signatories
- • Advising / Confirming / Negotiating banks
- • Reimbursing bank and correspondent chain
- • Freight forwarder, carrier, master of vessel
- • Vessel IMO number (Equasis, vessel sanction lists)
- • Flag state and previous flags (flag-hopping = red flag)
- • Ports of loading, transhipment, discharge
- • Bank correspondent chain in SWIFT MT202
- • Payment currency and clearing centre
- • HS code vs. dual-use control lists (EU Reg. 2021/821, US EAR 15 CFR 730-774)
- • End-user and End-use certificate (EUC) for military/nuclear/chem-bio potential
- • Origin restrictions (e.g. Russian oil price cap, embargo goods)
- • Sectoral sanctions (energy, defence, tech)
Red flags (TBML & fraud)
- ⚠ Ship-to-ship transfer with AIS transponder switched off
- ⚠ Vessel routes deliberately obscured or reflagged mid-voyage
- ⚠ Payment via a shell company in a high-secrecy jurisdiction
- ⚠ Price grossly below or above market (trade-based money laundering)
- ⚠ Complex letter of credit chains with no economic rationale (transferable, back-to-back, assignment of proceeds stacked)
- ⚠ Buyer insists on non-documentary conditions in the LC (UCP Art. 14(h) - banks disregard, but they signal a hidden agenda)
- ⚠ 'Prime bank instrument', 'fresh cut SBLC', 'MT760 for lease' - 100% fraud vocabulary
- ⚠ Sudden change of consignee or discharge port after LC issuance
- ⚠ End-user in a jurisdiction with no logical demand for the goods
The pre-contract compliance workflow
- Screen the counterparty, vessel and route. Names, UBOs above 25%, IMO number, flag history, load and discharge ports, and the correspondent bank chain. Record the screening result and date for audit. Start with the sanctions screening checklist.
- Check the Incoterm risk. A term that puts the seller in control of carriage (CIF, CIP, DAP, DDP) makes the seller responsible for vessel and route choice, which is where vessel-level designations bite. Map it with the Incoterms 2020 cost and risk table.
- Price the payment instrument. Confirmation pricing moves with country and bank risk, so screen before you model cost with the LC cost calculator, then check the draft credit with the LC application checklist.
Designations, price caps and tariff actions shift weekly. For a current read before you commit to a structure, Trade Expert AI answers with a daily-updated sanctions and tariff intelligence brief.
Authoritative list sources: US Treasury OFAC, EU Council CFSP consolidated list, UN Security Council consolidated list, UK OFSI, Swiss SECO. Last reviewed September 2026.
Numerical Example: SDN Screening Check
A match on the SDN list requires an immediate hold and reporting to the relevant authority.
Frequently asked questions
Which sanctions lists must exporters screen against?
At minimum: OFAC (US SDN, sectoral, 50%-rule), EU consolidated list, UK OFSI, UN Security Council, and the destination country's own list. Dual-use goods add EU Regulation 2021/821, US EAR, and country-specific export control lists. Screening covers buyer, consignee, notify party, vessel, and end-use.