This document discusses regulatory compliance issues related to trade screening. It outlines the growing global regulatory pressure around sanctions screening and monitoring for prohibited goods, entities, and vessels. It describes the typical stages of screening in a trade finance transaction, including screening the applicant, beneficiary, banks, ports, goods, and vessels involved. Currently, manual screening methods used by banks are limited and error-prone. The document then introduces Accuity's screening oracle on Corda, which provides an integrated sanctions screening solution on the Corda blockchain platform. The oracle screens all transaction data on Corda and provides an audit trail of the screening process to ensure regulatory compliance.

1. accuity.com
13 September, 2018
Sanctions Screening on Corda
Dr. Henry Balani
Head of Strategic Partnerships
Accuity
Understanding the regulatory requirements for trade compliance

2. Agenda
• Regulatory compliance issues
• What’s involved in screening goods
• Accuity’s screening oracle on Corda

3. Trade is important to many countries
Importance of trade to economic growth means that many countries want to ensure
compliant, efficient processes that encourage trade
Source: World Bank & OECD national accounts data
0
50
100
150
200
250
300
350
400
450
HongKong
Luxembourg
Singapore
Ireland
Maldives
Vietnam
Belgium
Congo,Rep.
Netherlands
Malaysia
Pacificislandsmallstates
Switzerland
Ghana
Poland
Germany
Zimbabwe
Mexico
Turkey
China
Australia
UnitedStates
Trade as % of GDP - 2017
World average – 81% of GDP

4. Proliferation financing is a growing concern
“the requirement for banks to follow strictly the
regulations aimed at detecting and preventing
Money Laundering, Financing of Terrorists or
Terrorist Organisations, committing or assisting
in Bribery and Corruption, evading tax
liabilities, the proliferation of weapons of
mass destruction and other financial crimes,
or the evading or breaking of sanctions
imposed on countries or individuals by
competent authorities [remains un]changed.”
Wolfsberg Group - Trade Finance Principles

5. U.S. sanctions Chinese bank over North Korea Financing
Treasury targets bank it says aided weapons programs

6. ZTE agrees to pay up to $1.2bn for violation US sanctions
Chinese telecoms group guilty of criminal charges over its dealings with Iran and North Korea

7. The US re-imposes sanctions on Iran
Global financial institutions fall in line with screening Iran related trade

8. Regulatory pressure has been growing…..
FATF Standards
2004
FATF Typologies
on Proliferation
Financing
Jun. 2008
The Wolfsberg
Group Trade
Finance Principles
2009
FATF Targeted
Financial
Sanctions related
to terrorism and
terrorist financing
Jun. 2013
2006 2011 2016
EAG WG
International
TBML report
Dec.2009
EAG WG ML in
Foreign Trade
Transactions
Dec. 2010
UK FCA Thematic
Review: control of
financial crime
risks in trade
finance
Jul. 2013
JMLSG
Guidance,
Trade Finance
Nov. 2014
OCC AML
Exam Manual
TBML Activities
Overview
Nov. 2014
US FINCEN
SAR/TBML
Advisory
Feb. 2010
APG TBML
Typologies
Report
Jul. 2012
MAS
AML CFT Controls
in Trade Finance
Oct. 2015
HKAB
Guidance paper
on TBML
Feb. 2016
Dubai FSA
Trade Finance
Report
Jan 2017
Wolfsberg,
ICC, BAFT
Trade Finance
Principles
Feb. 2017
OFAC
Executive
Order 13810
Sept 2017
OFAC
DPRK
Advisory
Feb 2018
FATF
Proliferation
Financing of
WMD
Feb 2018
2018
HK Assoc of
Banks
Guidance paper
on combating
TBML
Feb 2016

9. Global guidelines and regulation for shipping concentrates on ....
• Sanctioned goods
• Validity of the vessel name and IMO number
• Details of vessels - such as flag, journey history, name history
• Beneficial ownership of the vessel
• Port of loading and discharge of the vessel
• Ports of call for the particular transaction flow (origin port, destination port)
• Recent voyage history of the vessel (any embargoed country voyages)
No vessel ... called at a port in North Korea within the previous 180 days, and no vessel ... that has engaged in a ship-to-ship
transfer with such a vessel within the previous 180 days, may call at a port in the United States.
Regulatory pressure has been growing…..

10. The industry is facing rising compliance costs
due to:
Screening for terrorist
financing & money
laundering
Screening for
Dual Use
Goods
Screening for
sanctioned goods and
vessels

11. “
Typical stages of screening in trade finance transactions
Example LC trade:
The 3 checkpoints
Letter of Credit
Document presentation
Remittance
My trade
department is
compliant, we
screen
SWIFT
messages

12. What is screened at each stage
• Applicant
• Beneficiary
• Banks
• Port of loading, discharge
• Final destination
• Goods*
• Ports of loading, discharge,
transhipment
• Consignee, consigner
• carrier, charters, agent, freight
forwarder, shipping company
• Vessel(s) and vessel route
• Ordering customer
• Beneficiary
• Banks

13. What, if anything, are banks doing?
Using staff’s experience
Own list of military goods
Nothing (a recent survey by SWIFT &
Dow Jones found that 47% of recipients
said they “Do not screen against
controlled goods lists”
1
2
3
4
CTRL + F

14. CTRL + F is not foolproof
Goods descriptions can vary
greatly
• CAS #5798-79-8
• Chemical formula C8H6BrN
• BBN
• Bromobenzyl cyanide
• Common name - Tear gas

15. Components of a ballistic missile
• Outer case can be made from steel,
aramid fibre and carbon or glass epoxy
• Filament winding machines lay
the filaments in solid motor cases
• Solid propellant missiles use acrylic
acid /aluminium powder for fuel,
ammonium perchlorate as the
oxidizer and polybutadiene as
the binder
• Liquid fuel such as monomethyl
hydrazine and nitrogen tetroxide
• Guided during this phases by computer driven
gyroscopes or optical tracking systems
Propulsion
Guidance Payload
Launch Support Test Equipment

16. The EU Dual-use List
Product Group
a. Systems Equipment and Components
b. Tests, Inspection and Production
Equipment
c. Materials
d. Software
e. Technology
Category Number
1. Nuclear Materials, Facillities & Equipment
2. Special Materials and Related Equipment
3. Materials Processing
4. Electronics
5. Computers
6. Telecommunications and ”Information
Safety”
7. Sensores and Lasers
8. Navigation and Avionics
9. Marine
10.Aerospace and Propulsion
3 C 0 0 1

17. Trade compliance good practice
• Use technology to take a pro-active approach: re-screen
throughout the lifecycle of the trade
• Comprehensive screening: companies, vessels, goods,
locations, banks
• Policies and procedures mapped to workflow: escalate
decisions in a timely manner
• Digital auditability: full transparency on all checks
conducted and decisions made with supporting evidence
• Protect your organization against reputational damage and
fines

18. Accuity’s screening oracle on Corda
Integrated sanctions screening
Account data on Corda passed to
Accuity Compliance Link
Review transaction and retain
an audit trail

19. Integrated Workflow
• Ability to manage alerts and notifications
• Consolidated screen for commodity, vessel,
exposed persons, due diligence checks
• AML and KYC checks in one product

20. Thank you for your attention
Henry.balani@accuity.com