Solutions | AML Sanctions Screening

AML Guide for the Manufacturing Industry

Due to its complex global supply chains and frequent high-value transactions, the manufacturing sector is not immune to money laundering risks. This guide outlines the Anti-Money Laundering (AML) measures manufacturers must implement to safeguard their operations from criminal misuse.

Money Laundering and Manufacturing Companies

Criminals may exploit manufacturing companies in several ways to launder money. Common tactics include:

Using shell companies or fraudulent suppliers to hide the true source of illicit funds.

Inflating or underreporting the value of raw materials, equipment, or finished goods to funnel illegal money through seemingly legitimate transactions.

In trade-based money laundering (TBML), criminals manipulate invoices or shipping documentation to move illicit funds through international trade.

Some key areas of vulnerability for manufacturers include:

Trade-Based Money Laundering (TBML)

TBML is a common method of laundering money in the manufacturing sector, where criminals exploit discrepancies in trade documentation. They may falsify the value, quantity, or quality of goods being imported or exported to move money across borders without raising suspicion.

Over-Invoicing and Under-Invoicing

By over- or under-invoicing for materials or goods, criminals can disguise illicit funds as legitimate transactions, often across multiple jurisdictions.

Complex Supply Chains

The global nature of manufacturing supply chains offers opportunities for criminals to insert fraudulent companies or transactions into the process, making it difficult to trace the origin and destination of funds.

AML Regulations in the Manufacturing Industry

Manufacturers must adhere to AML regulations to prevent money laundering, particularly those involving international trade and high-value transactions.

Know Your Customer (KYC) Requirements

Manufacturers must implement robust KYC procedures to verify the legitimacy of their business partners and suppliers. This involves:

Conducting due diligence on suppliers, distributors, and customers to confirm their identity and assess their risk level.
Gathering information on the ownership structure of businesses they transact with, especially in high-risk regions or industries.
Identifying and verifying the ultimate beneficial ownership (UBO) of companies involved in transactions, ensuring transparency in business dealings.

KYC procedures should be integrated into the onboarding process and updated regularly to reflect any changes in the risk profile of suppliers or customers.

Sanctions Screenings

Manufacturers, particularly those involved in international trade, must conduct sanctions screenings to ensure they are not transacting with prohibited entities or countries. This involves:

Screening suppliers, customers, and financial institutions against global sanctions lists before entering into any agreements or conducting transactions;
Monitoring for any attempts to evade sanctions, such as using intermediaries or third-party brokers;
Reporting any suspicious activity to the relevant authorities if there is a match to a sanctions list.

Sanctions screening is essential at the initial contract stage and throughout the business relationship, especially when dealing with high-risk countries or industries.

Transaction Monitoring

Monitoring the financial transactions related to manufacturing is a key component of AML compliance. Manufacturers should:

Keep track of large and unusual payments, especially those involving multiple jurisdictions.
Investigate discrepancies between the value of goods and the amount paid, which could indicate TBML.
Logging unusual patterns or behaviours, using data analytics and transaction monitoring systems.

Red flags in the manufacturing industry include:

Sudden changes in a supplier’s invoicing or pricing without a clear business rationale.
Repeated use of complex trade routes or intermediaries that obscure the flow of goods or funds.
Inconsistencies between the shipping documentation and the goods received.

Adequate Supervision

Manufacturing companies must implement strong internal oversight to ensure that AML policies are effectively followed. This includes:

Appointing an AML compliance officer who is responsible for overseeing the company’s AML program and ensuring that all employees are aware of their responsibilities.
Ensuring that senior management is involved in the implementation and supervision of the AML framework.
Conducting regular audits of supply chains, financial transactions, and business relationships to identify any areas of concern.

Adequate supervision also involves providing ongoing training to employees, particularly those involved in procurement, finance, and logistics, to help them identify potential money laundering schemes.

By following these AML guidelines, manufacturers can protect their businesses from being exploited for money laundering, ensure compliance with international regulations, and maintain the integrity of their global supply chains.

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Global Sanctions Lists

The sanctions lists below are included in every sanctions data subscription. Additional sanctions lists can be included on request, please contact support for more information.

United States

Office of Foreign Asset Control (OFAC)

Specially Designated Nationals (SDN), Consolidated Sanctions List (Non-SDN) and various additional sanctions lists (MBS, CCMC, CMIC, CAPTA, FSE, PLC, SSI)

Canada

Global Affairs Canada

Consolidated Canadian Autonomous Sanctions List incl. Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act.

United States

Department of State (DoS)

ITAR Debarred (ITAR), Nonproliferation Sanctions (ISN), Cuba Restricted List

United States

Bureau of Industry and Security (BIS)

Entity List (EL), Denied Persons List (DPL), Military End User List (MEU), Unverified List (UVL)

United States

Financial Crimes Enforcement Network (FinCEN)

311 Special Measures

United States

Department of Homeland Security (DHS)

Uyghur Forced Labor Prevention Act Entity List (UFLPA)

United States

U.S. Customs and Border Protection

Withhold Release Orders

Argentina

Ministry of Justice

Public Registry of Persons and Entities Linked to Acts of Terrorism and Financing (RePET)

Brazil

Brazil Central Bank

Brazil

Brazil Federal Government

Empresas Inidôneas e Suspensas (Disreputable and Suspended Companies)

Brazil

Brazil Tribunal de Contas da União (TCU)

List of individuals disqualified from public service and debarred bidders

European Union

European Bank for Reconstruction and Development

List of Ineligible entities

European Union

Consolidated list of persons, groups and entities subject to EU financial sanctions (CFSP)

United Kingdom

Office of Financial Sanctions Implementation (OFSI)

Financial Sanctions by The Office of Financial Sanctions Implementation (OFSI), part of Her Majesty's Treasury (HMT)

Israel

National Bureau for Counter Terror Financing

Terrorist List National Bureau for Counter Terror Financing of Israel

Belgium

Federal Public Service Finance

National Financial Sanctions

Netherlands

Government of the Netherlands

National Sanctions List Terrorism

France

Ministry of Economy, Finance, and Recovery

List of Asset Freezes (GEL)

Switzerland

State Secretariat for Economic Affairs (SECO)

Consolidated Swiss Sanctions List

Poland

Ministry of Internal Affairs and Administration

List of persons and entities subject to sanctions

United Arab Emirates

Supreme Council for National Security

National Sanctions List with names of individuals and entities identified as

India

Ministry of Home Affairs

Terrorist Organizations and Unlawful Associations List

Singapore

Monetary Authority of Singapore

MAS Enforcement Actions

Singapore

Attorney-General's Chambers of Singapore

Terrorism (Suppression of Financing) Act 2002

Malasya

Ministry of Home Affairs

Ministry of Home Affairs List (Act 613, Section 66B)

Japan

Ministry of Finance

Economic sanctions and target list

South Africa

Financial Intelligence Centre (FIC)

Targeted Sanctions List

South Africa

Financial Sector Conduct Authority

Targeted Sanctions List

South Africa

National Treasury Department

Restricted Supplier and Tender Defaulter Report

Morocco

Commission Nationale chargée de l'application des sanctions (CNASNU)

Local Terrorist List with names of individuals and entities identified as terrorists by CNASNU (Commission Nationale chargée de l'application des sanctions)

Nigeria

Nigeria Sanctions Comitee

Nigeria Sanctions Commitee's sanctions list

* Additional sanctions lists can be added on demand. Just reach out to our Customer Success Team.

Politically Exposed Persons

What are Politically Exposed Persons (PEPs)?

Domestic Politically Exposed Person (DPEP)

These are individuals who hold prominent public positions within their own country.

This includes:

Heads of state or government
Senior politicians, government ministers, and judiciary officials
Senior executives of state-owned corporations
High-ranking military officials.They are classified as DPEPs due to their potential access to public resources, which could make them vulnerable to corruption or abuse of power.

Foreign Politically Exposed Person (FPEP)

These are individuals who hold, or have held, similar high-level roles in foreign countries. FPEPs are foreign officials or their associates who might also be in a position to abuse their influence for personal or financial gain.

Examples include:

Foreign heads of state or government officials
Senior politicians or diplomats from foreign governments
Foreign judges or military leaders

Domestic Politically Influenceable Person (DPIP) - Family Members

These are close relatives of Domestic PEPs (DPEPs).

Family members can include:

Spouses or partners
Children and their spouses or partners
Parents, siblings, or other close relatives. Due to their relationship with a politically exposed person, they may have access to privileged information or influence, which makes them susceptible to exploitation or corruption.
Close associates are individuals who are closely connected to a PEP, either socially or professionally.

Foreign Politically Influenceable Person (FPIP) - Close Associates

These are individuals who maintain close business or personal relationships with Foreign PEPs (FPEPs).

A close associate could be:

Business partners
Close friends or advisers
Legal representatives or those with significant control over a PEP’s assets FPIPs are often involved in business dealings or transactions that may raise concerns about conflicts of interest or the misuse of political connections.
Close associates are individuals who are closely connected to a PEP, either socially or professionally.

Each of these classifications is used in anti-money laundering (AML) and know-your-customer (KYC) processes to identify and mitigate risks associated with potential corruption or financial crimes. Identifying these individuals helps institutions flag potentially suspicious activities that may be linked to political influence.

Smart screening technology for effective AML compliance

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FBI's Most Wanted & Fugitives

The FBI's Most Wanted list is maintained by the FBI and publicly available on their website. Removal from the list typically occurs only upon capture, death, or dropped charges.

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Why AML compliance is important

For businesses to actively prevent financial loss and reputational damage, it's crucial that comprehensive due diligence processes are carried out.

Datanamix’s due diligence product suite includes AML (anti-money laundering) sanctions screening, PEP (PIP) data, Adverse Media and Crime data – all customisable depending on your specific industry, and unique business needs.

Datanamix offers a suite of AML Sanction Screening products to enable the right level of risk mitigation for every class of business – from accountable institutions bound by the FIC Act, to SMEs simply looking to protect their interests.

Datanamix due diligence product suite includes AML (anti-money laundering) Sanctions Screening, PEP (PIP) data, Adverse Media and Crime Data – all customisable depending on your specific industry, and unique business needs.

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Sanctions impose restrictions on commerce with specific individuals, entities, and states, and export controls impose limitations on the distribution of particular products and services, including software and applications.

Adverse Media

Adverse Media Screening is the process of monitoring public sources, like news and social media, to detect negative information about individuals or organisations. It helps businesses identify risks such as criminal activity, fraud, or regulatory violations, which could harm their reputation or legal standing. Used for risk assessment and compliance (e.g., anti-money laundering or Know Your Customer regulations), adverse media screening is often automated to handle large volumes of data and provide real-time alerts. It's a key part of due diligence and risk management strategies.