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Seemingly innocent payments to countries who are ‘state sponsors of terrorism’

The Securities and Exchange Commission (SEC) in the US has been investigating pharmaceutical companies and other businesses' who had been sending funds to their foreign offices located in Cuba, Iran, Sudan and Syria — countries designated by the U.S. State Department as state sponsors of terrorism. Unfortunately, the funds were being further passed to individuals who were not necessarily relevant to the material business activities of the company. The Foreign Corrupt Practices Act (FCPA) and other hregulations classify these as potentially fraudulent/really fraudulent transactions.

So what can companies do to introduce tighter internal controls and ensure that any payments they make into the " Terror Zone " are being used within a business's justifiable parameters and don't end up being used in fraudulent or terrorist activities? The main solution is to screen all transactions to these countries against a politically exposed persons (PEP) list. Companies will gain insight into whether or not the recipient is a government official, relative or associate of such official or state-owned facility. Then, with that knowledge in hand, a compliance officer would know to monitor the transactions for potential FCPA violations.

This needs to be carried out before the payment/transaction is made, post-transaction review of these remittances comes too late.


Anti-money laundering controls and reviews need to be part of everyday operations. Are you screening all your payments to Cuba, Iran, Sudan and Syria?

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