Why and how to conduct a Watchlist Check

An international watchlist is a set of individuals or entities identified by a governmental body and levied with a sanction. These sanctions may be levied for several reasons including; terrorism, financing of terrorism, human rights violations, weapon or drug trafficking, cyber-crimes, treaty violations and more.

Many governments compile and maintain global watchlists detailing their own sanctions as well as those of other countries that placed sanction measures. Some examples of watchlists compiled by Government and private institutions include:

• Australia: Department of Foreign Affairs and Trade Consolidated Watchlist
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• Canada: Consolidated Canadian Autonomous Sanctions List
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• European Union: The EU Consolidated List
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• United Kingdom: Office of Sanctions Implementation UK Sanctions List
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• United States: Office of Foreign Assets Control Blocked Persons and Specially Designated Nationals List 
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If a person or business entity is placed on a watchlist, it means that they have become subject to one or more sanction measures. These measures include:

• Asset Freezes: The freezing of any foreign-held assets of the targeted individual, business or country.

• Business Restrictions: Businesses are prohibited from trade, business relationships or investment with the sanctioned individual, entity or country.

• Embargoes: Typically only levied on countries, embargoes prohibit the import and export of goods and/or services from the sanctioned country. In some cases, embargoes may be limited to specific businesses or products, such as an embargo on international lending or certain technology, such as computers or nuclear technology.

• Travel Bans: These bans are typically levied on individuals and prohibit them from travelling from their country of origin or residence to any country that abides by the travel sanctions.

What is a Watchlist Check?

A Watchlist Check, sometimes also referred to as a Sanctions Check, does a sweep of monitored lists, sanctions lists and other sanction databases to determine whether an individual is listed on them.

In addition, Watchlist Checks may also look at other available international lists that identify individuals who may not be specifically sanctioned on government lists, such as:

• Adverse Media: An Adverse Media Check looks at a database of individuals that have been linked with illicit activities drawn from tens of thousands of international news sources and feeds.

• Enforcement Actions: Lists of individuals with outstanding criminal warrants and wanted lists drawn from international law enforcement agencies.

• Politically Exposed Persons (PEP): A Politically Exposed Person is an individual identified as holding a prominent position either in government or in an international body (such as the UN or a head of state). Foreign PEPs are considered to present a higher risk of bribery or corruption due to the position they hold.
  

If an applicant's name appears on one of the searched watchlists during a check, the person who requested the check receives an alert. 

What industries and roles may require Watchlist Screening?

When hiring for new positions, the financial sector, Government bodies, or any job that gives access to privileged information may benefit from performing a Watchlist Check.

Businesses may also want to perform Watchlist checks when taking on new international customers, investors or importers. A Watchlist Check can ensure that the business complies with international Know Your Customer (KYC), Anti-Money Laundering (AML) and Customer Due Diligence (CDD) obligations.

How do I perform a Watchlist Check?

As there are tens of thousands of names on watchlists, many of which may have similar spellings. Watchlist Checks are performed by third-party companies, such as Equifax, LexisNexis or Sanction Scanner. These companies utilise advanced algorithms to scour international watchlists to see if the subject appears anywhere on a list.

The company requesting the check receives an alert if the subject appears on any checked list.

Is permission required for a Watchlist Check?

As a rule, no, but there is no harm in informing candidates that a watchlist check is a necessary part of your hiring process. Unlike many other forms of background or screening checks, there is no permission required for a Watchlist Check. Watchlist databases are publicly available and contain no privileged or private information.

Is there a risk of false positive identifications?

Yes, there is a risk of false positive identification. A false positive occurs when watchlist reporting incorrectly identifies a match. There are potentially thousands of names and data points in Watchlist Checks to compare against, making false positive identifications possible.

Organisations screening potential new hires may wish to talk to an applicant and perform their own manual check. This can be done by checking names against international watchlists and comparing ages, ethnicities and other identifying characteristics. If an alert has been triggered, this can help ensure that a result isn’t a false positive.

What other verification checks can be conducted? ‍

In addition to Watchlist Checks, employers may be required by law or choose to conduct a range of pre-employment checks to ensure they make the right hiring decision. These checks include:

• Employment verification checks
• Criminal record checks
• Education verification checks
• Police checks
• Working with Children checks
• Professional membership checks
• Employment credit checks
• Work rights or Visa checks
• Identity verification checks‍
• Traffic Offence Checks 
• Social media background checks

Conclusion

Watchlist Checks compare the identity of a candidate against the names on international watchlists compiled by numerous countries around the world. These watchlists contain people involved in financing terrorism, arms dealing, human trafficking, fraud, people on law enforcement's most wanted lists, politically exposed persons and more.

If your business is trading with overseas partners or is hiring for positions with access to money, privileged information or requiring high security, you may want to check if a potential hire or business partner appears on any international watchlists. 

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