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Sanctions Module
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The FRDM Sanctions Module monitors over 2.8M public records, 455M+ companies, 522M+ key people, and 1B+ relationships to identify sanctioned and high risk entities in your supply chain.
Leveraging third party databases like Sayari against your spend data, sanctions checks can be applied to any direct supplier, searching for upstream commercial relationships and ownership records. For example any company on the UFLPA entity list, the XPCC, or any other companies with known ties to forced labor will be flagged. Multiple third party databases are leveraged to offer this service including ownership records, shipping records, court records, media mentions and more.
Benefits of Running Sanctions Checks On Your Suppliers
Companies that engage with sanctioned suppliers may face legal liabilities, reputational risks, and financial losses. The following are some of the legal hazards that companies need to be aware of when dealing with sanctioned suppliers:
Violations of Trade Sanctions:
Companies that engage with sanctioned suppliers may violate trade sanctions imposed by governments. These violations can lead to fines, penalties, and even criminal prosecution. For example, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) has the power to impose civil and criminal penalties on companies that violate US sanctions laws. Companies that engage with sanctioned suppliers may also face trade restrictions, including the suspension of import and export licenses.
Contractual Liabilities:
Companies that engage with sanctioned suppliers may face contractual liabilities. Contracts may contain provisions that require compliance with sanctions laws, and failure to comply may lead to breach of contract claims by customers or suppliers. In addition, contracts may contain indemnification provisions that require companies to pay damages resulting from a breach of sanctions laws by their suppliers.
Reputational Risks:
Companies that engage with sanctioned suppliers may face reputational risks. Customers, investors, and other stakeholders may view engagement with sanctioned suppliers as evidence of non-compliance with ethical and legal standards. Such negative perceptions can damage a company's reputation and brand, leading to decreased sales and market value.
Financial Losses:
Companies that engage with sanctioned suppliers may face financial losses. Sanctions can lead to the freezing of assets, the imposition of trade restrictions, and the suspension of import and export licenses. Such measures can disrupt supply chains and lead to increased costs and lost revenues.
How It Works
FRDM uses third party data providers like Sayari to identify upstream connections of sanctioned sub-suppliers (red dot) to your direct supplier (blue dot). Each arc represents the specific commercial relationship which is highlighted when hovered over.
CRITICAL RISKS include any sanctions lists the direct supplier or connected entities are listed.
WARNINGS include additional risks related to direct or upstream connected companies.
ADDITIONAL RISK FACTORS include any additional governance or human rights risks related to direct supplier or upstream connected suppliers.
Use Cases For Sanctions Module
The United States has banned products that are connected to supply chains in Xinjiang, China, due to concerns of human rights abuses against Uyghur Muslims in the region. In 2020, the US Customs and Border Protection (CBP) issued Withhold Release Orders (WROs) against certain products originating from Xinjiang, including cotton, tomato products, and hair products, to prevent the import of goods produced with forced labor. The US has also imposed sanctions on Chinese entities and individuals involved in the human rights abuses in Xinjiang, including the Xinjiang Production and Construction Corps and the Xinjiang Public Security Bureau. Companies must ensure that their supply chains are free from forced labor and comply with the WROs and sanctions regulations to avoid legal and reputational risks.
Companies must comply with various regulations when engaging with sanctioned suppliers in their supply chain. In the United States, the Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions based on US foreign policy and national security goals. The OFAC has published guidance for companies on compliance with sanctions laws and recommends that companies conduct due diligence on their suppliers and monitor their activities. The European Union also imposes sanctions on individuals and entities, and companies must comply with the EU's sanctions regulations. The UK's Office of Financial Sanctions Implementation (OFSI) administers and enforces financial sanctions, and companies must comply with UK sanctions laws. In addition, the United Nations imposes sanctions on countries and individuals, and companies must comply with UN sanctions regulations. Overall, companies must be aware of and comply with the relevant sanctions laws and regulations in their jurisdictions and implement effective compliance programs to mitigate legal hazards.
Sanctions and Warnings Lists Currently Monitored
(June 1, 2023)
Consolidated Australian Sanctions List
Consolidated Canadian Autonomous Sanctions List
EU Financial Sanctions List
Japan Ministry of Finance Economic Sanctions List
Swiss SECO Sanctions List
UK Sanctions List
UN Security Council Sanctions
US OFAC Consolidated Sanctions List
US OFAC Specifically Designated Nationals (SDN) List
Regulatory enforcement actions lists:
Ireland Disqualified/Restricted Persons List
Mexico Government Registry of Sanctioned Providers
Mexico Government Registry of Sanctioned Public Servants
Mexico SAT Article 69-B Non-Compliance Database
Russia Legal Entities with Disqualified Executives
Russian Registry of Disqualified Persons
US FINRA Barred Individuals
US HHS LEIE Database
US SAM.gov Entity Exclusions Database
Supply chain screening data
US CBP Withhold Release Orders and Findings Database
US Department of Commerce BIS MEU List
US Consolidated Screening List
US DHS Uyghur Forced Labor Prevention Act List
US NDAA 1237 List
US NDAA 1260H List
Additional Risk Factors
Forced Labor Risk
Direct Trade History with WRO Entity
Direct Trading History with Xinjiang Entities
Entity Located in Xinjiang
Keywords Found in Company Attributes
Owned by Xinjiang-based entity
Owner of Xinjiang-based entity
Subtier Trade History with WRO Entity
Subtier Trading History with Xinjiang Entities
XPCC Contractors
Xinjiang Operations
Former Sanctions
Owned by Sanctioned Entity
Owned by State Owned Enterprise
Owned by WRO Entity
Owner of Entity Subject to Regulatory Action
Owner of Entity in Export Controls List
Owner of Forced Labor Risk Entity (Xinjiang Import Controls Designation)
Politically Exposed Person
Possibly the Same as Entity with Forced Labor Risk (Entity Located in Xinjiang)
Possibly the Same as Entity with Forced Labor Risk (Xinjiang Operations)
Possibly the Same as State-Owned Enterprise
Possibly the Same as a Politically Exposed Person
Possibly the Same as a WRO Entity
Possibly the Same as an Entity Subject to Regulatory Action
Regulatory Action
State Owned Enterprise
Related to PEP
Related to Sanctioned
Related to WRO Entity
Terrorism (from Adverse Media)
Basel AML
Corruption Perceptions Index
EU High-Risk Third Countries
Sources:
Office of Foreign Assets Control. (2021). Sanctions Compliance Guidance for the Private Sector.
European Commission. (n.d.). Sanctions.
HM Treasury. (2022). Financial Sanctions: Guidance.
United Nations. (n.d.). Sanctions.
US Customs and Border Protection. (2020). Withhold Release Orders and Findings.
US Department of State. (2021). Xinjiang Supply Chain Business Advisory.
