What is a Denied Party and why is it important to do your research?

In international trade, denied parties (also known as restricted parties) are individuals or entities that businesses are prohibited from trading with by government agencies. In short, you cannot export your goods to them or trade with them in any way. There may be various reasons why an organisation or individual are added to a denied party list: they may be involved with terrorism, pose a threat to national security, be involved with organised crime, or have a history of corrupt business practices.

When doing business with overseas customers, it is your responsibility to conduct sufficient due diligence to determine whether customer businesses, or individuals within those businesses, are on a denied party list. (See our Due Diligence Tool)

Consequences of trading with denied parties

Ignorance is not an excuse – you can’t just say that you didn’t know - and the consequences of failure to adhere to international regulations can be extremely serious. Exporters can face heavy fines, lose their export privileges, or even face criminal prosecution.

Furthermore, not providing sufficient documentation on your consignments for carriers to conduct their own screening, could see your goods facing delays or even being blocked.

How to check for denied parties

By law, businesses trading internationally must run checks on their customers to ensure they are not on denied party lists. This can be complex, as some will only feature on lists in specific territories and denied party individuals within companies may be harder to determine. There are hundreds of denied party lists across the world and they change continually. Manual checks are therefore time consuming for exporters and not necessarily reliable if source data is not up to date.

Automating the process

Accessing an automated process that checks against live data is therefore the most efficient and accurate way to remain compliant. Data needs to be audit-proof so that regulators can verify your KYC checks, which ideally means using primary sources for guaranteed data integrity. This not only allows you to avoid trading with denied parties but helps your consignments to avoid potential delays.

Open Borders Direct can provide this service, with access to a real-time global register network of over 110 million companies in 200 jurisdictions.