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Identifying terrorist suspects

Governments introduce sanctions for a variety of reasons - but one of the most important is to deny criminals, including those suspected to be involved in terrorist activity, access to the international financial system. Banks play a pivotal role in international efforts to combat terrorist financing and, through our programme of continuous improvement in sanctions risk management, we are committed to these initiatives.

We have procedures in place that prohibit dealings by our offices with suspect terrorist and other criminals listed as sanctions targets. These procedures are supported by our systems, which assist in identifying accounts and transactions which may include sanctioned parties. We participated in a British Bankers' Association team working on industry guidance on sanctions controls this year.

Screening at the front line

Screening for listed names is an integral part of our CDD process. We check names before accounts are opened, and then periodically re-check them throughout the life of the account. Our staff have access to an automated screening facility which enables them to check names online - maximising the effectiveness of our controls while minimising delays for legitimate clients. This year we deployed an improved system for the periodic re-screening of account names, which we will roll out across all our offices in 2010, replacing a number of less efficient legacy systems.

Filtering Transactions

Our systems also screen the names linked to transactions. Every day millions of payment messages pass through the international banking system. It is vital that we minimise the risk that any payment we process involves a sanctioned criminal or terrorist. We meet this challenge by constantly refining and upgrading our screening capabilities. We extended the coverage of our transaction screening processes over the year and plan to extend to further products and services in 2010.

When our systems identify an account or transaction involving a party with an identical name to that on a sanctions list, further checks are made to verify whether that party is, in fact, a sanctions target. On the rare occasions when it appears possible that a genuine sanctions target may be involved, appropriate action is taken. This may include declining or freezing the transaction or account and reporting it to the relevant regulators.

Training our Staff

As systems produce large numbers of potential alerts, it is critical that we train our staff to make informed decisions which ensure effective risk management without adversely affecting service levels for legitimate customers. We have ongoing training programmes for staff required to make these decisions and clearly defined processes for them to escalate more complex cases to those with special legal expertise.

Useful Links

HM Treasury, which has responsibility for UK sanctions:
http://www.hm-treasury.gov.uk/fin_sanctions_index.htm

The UK FSA's report on the approach of financial services firms to UK financial sanctions. The report provides useful guidance on best practice:
www.fsa.gov.uk/pubs/other/Sanctions%20Final%20Report.pdf

US Department of Treasury Office of Foreign Assets Control, which has responsibility for US sanctions:
http://www.treas.gov/offices/enforcement/ofac/

United Nations Security Council Sanctions Committees website:
http://www.un.org/sc/committees/

European Commission sanctions website:
http://ec.europa.eu/external_relations/cfsp/sanctions/index_en.htm

Report tools

Annual Report and Accounts 2009