The inclusion of deceased individuals on sanction lists

Why are there deceased individuals on sanction lists?

Global sanction lists are constantly being updated and have seen an important inflation in later years with 47,000 entities added, deleted or amended in 2022 alone. This vast amount of data makes it extremely difficult for a financial institution to screen successfully against names on sanction lists that fall within its risk appetite. Sanction screening is also made more complex by sanctioned individuals who are aware of their presence on sanction lists using advanced tactics to avoid detection as they attempt time and again to access the globe’s financial systems.

Due to this, increased levels of fuzzy matching capabilities are needed by a system for more precise matching and alerting against sanctioned names during routine customer and transaction data screenings. Despite these ongoing challenges and complexities, financial institutions are also expected to screen against deceased individuals on sanction lists. The question is often asked as to why this is necessary. Why is it not sufficient to focus on “live” records than on the deceased?

Deceased individuals are frequently removed from sanction lists. For example, the Cuba Sanctions programme within the OFAC Specially Designated Nationals (SDN) list was cleared of out-of-date names in March 2015, removing deceased people, inactive companies, and destroyed ships. Among them was an individual who had been deceased for 26 years.

Despite these efforts, there is still a high number of deceased individuals included on sanction lists globally. There are several reasons for this.

Firstly, building a case to formally delist a deceased individual from a sanction list can take several years. To remove a deceased person from a sanction list, a reliable death certificate is required. This is often hard to come by, for example, in Taliban-controlled regions, where identified terrorists may have been killed in drone attacks.

This is also relevant if an individual has died in an ungoverned area or country where identity verification is unreliable and where burials take place as soon as possible after death. Without an official death certificate, it is difficult to ensure that an individual is deceased.

Secondly, even if an individual is confirmed to be deceased, names are often kept on lists to ensure that the financial assets are not used by a third party. These assets remain legally frozen until any risk has been nullified; the same also applies to the assets of close family members of a deceased person on a sanction list.

Osama Bin Laden was officially removed from the United Nations’ sanction list on 21 February 2013, nearly two years after he was killed in Pakistan in May 2011. It was reported that the delisting delay was due to “the effort to ensure that his money, now in frozen assets, would not end up in the hands of Al Qaeda or other terrorists”.

However, it is interesting to note that Osama Bin Laden is still currently named on the OFAC SDN list with five additional “AKAs” over a decade after his death , as the US Department of the Treasury still deems his assets to bear risk.

Finally, some individuals might be reported as deceased only to resurface later. Former Taliban official and Afghan military leader Jalaluddin Haqqani has been reported dead on several occasions before his official death in 2018, clearly demonstrating the risk of premature removal of a deceased individual from a sanction list. For this reason, Haqqani is still included on several global sanction lists.

This is the current entry of Jalaluddin Haqqani on the EU European Commission Financial Sanctions Consolidated List:

The decision to screen against a particular list or name type is based on a financial institution’s risk appetite. The same is true for screening names of deceased individuals. However, financial institutions risk important reputational damage and fines by not taking such screening steps. Therefore, it is paramount that financial institutions have rigorous and efficient sanction screening systems in place to comply with regulatory recommendations and guidelines.

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