To ensure compliance with economic sanctions established by governmental authorities in the jurisdictions where it operates, a financial institution requires that all new and existing customers be screened at onboarding and quarterly thereafter. Is this step sufficient to ensure compliance?

The described process is insufficient because sanctions lists are dynamic and updated by government authorities at irregular intervals, often daily. A fixed quarterly screening schedule creates a significant compliance gap. If a customer is added to a sanctions list the day after a quarterly screening, the financial institution could unknowingly conduct business with a sanctioned party for up to three months, violating its legal obligations. The industry standard and regulatory expectation is to screen the entire customer base promptly whenever a relevant sanctions list is updated to ensure immediate compliance.

B. International guidance, such as that from the Wolfsberg Group and FATF, emphasizes timely, risk-based screening against list updates, not a fixed periodic schedule that ignores the ad-hoc nature of designations.
C. While screening and enhanced due diligence (EDD) for new relationships are crucial, this option fails to address the primary flaw in the scenario: the inadequate screening frequency for the entire existing customer base.
D. Screening existing customers only quarterly does not ensure the institution avoids dealing with sanctioned parties. The significant time lag between screenings creates a high risk of non-compliance.

1. ACAMS CAMS6 Study Guide (6th Edition). Chapter 4, Section: "Sanctions Compliance," discusses the operational elements of a sanctions program. It clarifies that screening is not a one-time event at onboarding but an ongoing process. The guide emphasizes that customer and transaction databases must be screened against any updates to sanctions lists to be effective. (Specifically, the principles outlined on pages 268-270 imply the need for ongoing screening beyond a simple periodic review).

2. The Wolfsberg Group. (2019). Guidance on Sanctions Screening. Section 3.3, "Screening Frequency," page 9, states: "In addition [to periodic screening], an FI should screen its customer base in a timely manner following any updates to relevant sanctions lists." This directly contradicts the sufficiency of a simple quarterly schedule and supports the need for event-driven screening.

3. Financial Action Task Force (FATF). (2023). International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation – The FATF Recommendations. The Interpretive Note to Recommendation 6, page 52, requires countries to implement targeted financial sanctions "without delay." This obligation flows down to financial institutions, which cannot meet a "without delay" standard if they only screen their customer base on a quarterly basis.