Restricted Party Screening (RPS) – what is it?
Restricted Party Screening (RPS) is the process of checking customers, suppliers, business partners and other commercial entities for their presence on sanctions lists, embargoes and other regulatory restrictions. Its purpose is to ensure that the company does not conduct business with entities subject to legal or commercial restrictions. RPS is a key element of trade compliance and helps companies avoid financial penalties, legal consequences and the risk of reputational damage resulting from unknowingly working with sanctioned entities.
Frequently asked questions (FAQ)
1. Which entities are subject to RPS checks?
The inspection covers a wide range of entities that may be on sanctions lists. These include companies and organizations that are subject to restrictions, e.g. those on OFAC (USA), EU or UN lists. Individuals such as politicians or businessmen associated with illegal activities may also be subject to sanctions. Financial institutions, including banks, may be subject to restrictions due to suspicions of money laundering or terrorist financing. In addition, some countries, such as North Korea or Iran, are on embargo lists, which means that trade with them is prohibited or restricted.
2. How does Restricted Party Screening work?
The RPS process begins with the verification of the contractor before the start of cooperation. The company checks its data in global sanction databases, comparing the information with restrictive lists such as OFAC (USA), EU Sanctions List or UN Security Council List. If the system detects a match, an alert is generated and the company decides on further steps, such as rejecting the transaction or reporting the case to the supervisory authorities. Regular checks on contractors allow for ongoing monitoring of their status and avoidance of commercial risk.
3. What sanctions lists are used in RPS?
Various sanction lists are used within RPS, including the OFAC SDN List (USA), which includes entities sanctioned by the US Treasury Department, and the EU Sanctions List (EU), which identifies companies and individuals restricted by the European Union. There are also global restrictions, such as the UN Security Council Sanctions List, as well as national lists, such as the UK Sanctions List in the UK. In addition, the US Department of Commerce maintains the BIS Entity List, which includes entities subject to export restrictions.
4. What are the consequences of doing business with a sanctioned entity?
Working with an entity on the sanctions list can have serious consequences. Companies can be charged high financial penalties for violating trade sanctions. Banks can block transactions by refusing to process payments for companies working with sanctioned entities. There is also the risk of legal consequences, including lawsuits against companies violating sanctions regulations. In addition, doing business with sanctioned entities can seriously damage a company’s reputation, negatively affecting its relationships with customers and business partners.
5. Which industries use RPS the most?
The screening of sanctioned parties is particularly important in several key industries. In international trade, RPS is essential for the import and export of goods subject to regulatory control. In the banking and finance sector, it is used to screen customers and transactions for compliance with anti-money laundering (AML) regulations. In logistics and transportation, screening is used to check if entities using transportation services are involved in sanctions violations. In the technology and telecommunications sector, the transfer of technology to restricted countries is controlled, and in the arms industry, RPS is used to prevent the sale of military equipment to embargoed entities.
Restricted Party Screening (RPS) is a key process in international trade and finance that ensures companies do not cooperate with entities subject to sanctions, embargoes or other restrictions. Its use allows protection against legal, financial and reputational risks, while supporting compliance with global trade regulations.
