FIN-FSA’s thematic review of sanctions screening completed – supervised entities must pay attention to system testing and timeliness of sanctions lists
The Financial Supervisory Authority (FIN-FSA) has conducted a thematic review of sanctions screening by credit institutions and payment service providers during the past year. On the basis of the review, supervised entities must pay particular attention to the hit accuracy of systems, regular testing and the update cycle of sanctions lists.
Key findings
Most of the supervised entities’ systems detect names on sanctions lists well when the spelling matches the official list. By contrast, the results for the modified test data set decreased significantly for several entities, which increases the risk of circumventing sanctions screening controls. The systems of eight entities detected names relating to national freezing orders poorly or not at all.
Delays were found in the updating of sanctions lists. Nearly half of the respondents reported updating the lists within 24 hours. The FIN‑FSA considers that these supervised entities face a risk of breaching their obligations to freeze the funds and economic resources of a sanctioned party if there is a 24‑hour delay in updating new sanctions lists.
In addition, the FIN-FSA observed that entities that had outsourced system maintenance achieved poorer results than those handling maintenance in-house.
FIN-FSA’s requirements and recommendations
The FIN-FSA requires that:
- supervised entities ensure the functionality and hit accuracy of sanctions screening systems through regular testing,
- the sanctions lists used in sanctions screening shall be up to date. The supervised entities shall pay attention to the time it takes them to update their sanctions lists, as new and amended sanctions lists enter into force immediately upon publication in the Official Journal of the EU.
- payment service providers offering instant credit transfers shall take into consideration the obligations from instant payments regulation1 that require PSPs to update sanctions lists immediately after the entry into force of any new targeted financial restrictive measures, and immediately after the entry into force of any amendments to such targeted financial restrictive measures.
- supervised entities ensure sufficient resources for system maintenance, management of sanctions lists and handling of alerts.
The FIN-FSA will provide entity-specific feedback to the entities that participated in the thematic review and monitor progress in corrective measures.
For further information, please contact
Anssi Leisio, Chief Specialist, anssi.leisio(at)fiva.fi or telephone +358 9 183 5524
Appendix
Summary of the thematic review
1Article 5 d of Regulation (EU) 2024/886 of the European Parliament and of the Council