Many regulators establish economic sanctions lists of countries, persons and entities when they consider business should not be done with them because of their involvement in terrorism, money laundering, criminal activities, frauds, war financing…etc. It is important for economic stakeholders and financial ones in particular to know this information for their AML/KYC* processes. But this information is not enough: financial institutions also need to screen securities to make sure that while investing in these they are not entering in business relation with these sanctioned bodies and individuals. Based on each regulator’s rule, they need to clearly identify tainted financial instruments in order to safely invest in “clean ones”.
*Anti-Money Laundering/Know Your Customer