Denied party screening (DPS) is a critical part of any trade management program. A full understanding of what sanctions or other restrictions are in place when choosing potential partners has always been essential in meeting know your customer rules and other compliance demands. However, in a challenging and fast-moving environment in 2025, this should be an even larger priority.
This is especially important for traders doing business in the US, whether importing or exporting. The administration of president Donald Trump has already made clear it is pursuing a foreign policy that focuses heavily on tariffs and sanctions. Therefore, it is to be expected that new rules and restrictions will be brought in frequently and with little notice.
Other nations are already responding. For example, earlier this month, China added two major US firms to its unreliable entity list, which may open them up to a range of fines and sanctions that restrict how they do business in the country. Clothing firm PVH - owners of brands such as Tommy Hilfiger and Calvin Klein - and biotech company Illumina were accused of "adopting discriminatory measures" against China.
The challenges of effective screening
It's important that businesses around the world keep up to date on developments such as these that may impact suppliers or buyers. However, this is no easy task. For instance, the US alone maintains more than 140 different lists of sanctioned parties, with government agencies including the Commerce Department, State Department, Treasury Department and Justice Department all having their own data. Worldwide, the number of sanctions listed stands at over 1,400.
Navigating these lists can prove highly challenging. As well as the fact that they are constantly being updated, it can be tricky to determine whether certain categories of goods will be subject to restrictions. For example, some 'dual-use' items may be intended primarily for benign civilian uses, but could also have military or national security applications that mean they cannot be shipped to certain parties.
Elsewhere, it's important that firms verify exactly who they are dealing with and whether or not they are on sanctions lists. If individuals or businesses have similar names or addresses to denied parties, for instance, inaccurate data could mean legitimate partners are inadvertently rejected.
However, the penalties for breaching rules related to trade embargoes, quotas or export controls can be high. For instance, in 2023, US firm Seagate was handed a $300 million penalty for breaching export controls relating to sales of computer hardware to China. In the current political climate, consequences for dealing with foreign adversaries, whether intentionally or not, may be even higher.
Why a turbulent trade environment increases the need for DPS solutions
With so many potential sanctions lists to check and compare whenever doing business internationally, DPS is always a challenge. But in an environment where tariffs, export controls and other sanctions are likely to be introduced, adjusted and withdrawn in a short space of time, it will be harder than ever for firms to keep up.
A recent dispute with Colombia, for example, may give an indication of how restrictive trade measures can be enacted, changed and cancelled. Following a political dispute with the country over the deportations of immigrants from the US, Mr Trump announced blanket 25 percent tariffs on the country and sanctions against a number of government officials with no warning. Reciprocal measures by Colombia followed, before a deal was reached to cancel the measures - all within the space of a few hours.
It's likely that similar moves may be imposed in the future as a means of exerting pressure on other countries, and there are no guarantees about if and when they may be removed. Therefore, having solutions that can automatically update to the latest information and deliver accurate details quickly, from across every relevant sanctions list, is a must-have in 2025.