Sanction Screening in Qatar: Regulations and Compliance Guide

Sanction screening is essential for Qatar’s financial sector due to its unique position as a global financial hub and a key player in regional diplomacy. Qatar’s strong international trade ties, especially in the energy sector, make it vulnerable to scrutiny from global regulators. Effective sanction screening ensures that Qatari institutions do not engage with individuals or entities linked to unlawful activities, protecting the country’s financial reputation.

Moreover, as Qatar continues to build its status as a trusted investment destination, maintaining robust screening practices is critical to uphold its position in international markets and to avoid sanctions that could harm its economy and international relations.

What is Sanction Screening in Qatar?

Sanction screening in Qatar is the process of checking individuals, companies, and transactions against official sanction lists to ensure that no dealings occur with parties linked to money laundering, or other serious crimes.

According to the Guidance on the Implementation of an Effective Sanctions Compliance Programme issued by the QFCRA,

1. Screening Controls

• Implement transaction screening to detect links to sanctioned individuals/entities.

• Conduct customer (name) screening, including related or connected parties.
  

• Apply screening during onboarding and throughout the customer relationship lifecycle.
  

2. Screening System Requirements

• Use a robust, well-documented screening methodology.

• Employ automated systems (internal, external, or both); avoid relying only on manual processes.

• Ensure systems are frequently updated to reflect the latest sanctions lists.

3. Sanctions Lists to Screen Against

• UN Security Council (UNSC) Sanctions List

• Qatar Domestic Sanctions List

• Any additional sanctions lists identified through the firm’s own sanctions risk assessment

4. Special Requirements

• Ensure capability to respond to PPO (Proliferation of Weapons) alerts

• Screen against any applicable asset freezing orders

5. Ongoing Compliance

• Maintain an effective monitoring system for updates to sanctions lists.

• Review and update screening procedures regularly as part of the AML/CFT programme.

• Ensure staff are trained on the use of screening tools and understanding of Qatar-specific requirements.

Qatar’s Sanctions Regulations and Legal Framework

Qatar has developed a robust legal infrastructure to enforce financial sanctions, ensuring alignment with its international obligations. This legal framework mandates that all regulated entities, particularly financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs), incorporate sanctions compliance into their everyday operations.

• Circular No. (5) of 2021, issued by the Qatar Central Bank, sets out the responsibilities of financial institutions in enforcing targeted financial sanctions. It emphasizes the importance of ensuring that systems are capable of identifying and managing transactions linked to restricted individuals or entities.

• The Qatar Financial Centre Regulatory Authority (QFCRA) Guidance on Sanctions provides detailed procedures for identifying, freezing, and reporting assets tied to sanctioned parties. This guidance plays a critical role in supporting compliance with both domestic and international sanctions.

These regulations are designed to ensure Qatar’s compliance with global standards, including those set by the United Nations Security Council, the European Union, and the U.S. Office of Foreign Assets Control (OFAC). This legal alignment reflects Qatar's commitment to maintaining a secure financial environment and reinforcing its position within the global regulatory framework.

Qatar-Specific Sanctions Compliance Checklist for Financial Entities

Firms operating under QFCRA oversight must ensure their Sanctions Compliance Programme reflects the specific nature, size, and risk profile of their operations. The following points serve as a structured guide, not a comprehensive list, to assist in the design, implementation, and review of such programs.

1. Foundational Framework

• Risk Identification:
  Establish a clear understanding of the firm’s exposure to sanctions risks. This includes obligations under United Nations Security Council (UNSC) sanctions, Qatar’s national sanctions regime, and any other global or sector-specific lists relevant to your operations.

• Programme Design:
  Build a comprehensive sanctions compliance structure tailored to the firm's risk assessment, ensuring that governance, controls, and escalation procedures are integrated.

• List Compilation:
  Maintain an internal sanctions reference list that consolidates UNSC designations, Qatar’s domestic sanctions, and any additional jurisdictions or bodies identified through the firm’s risk analysis.

2. Ongoing Obligations and Technical Infrastructure

• List Maintenance:
  Establish a documented process for regular review and timely updates of all sanctions lists, aligned with official updates and risk triggers.

• NCTC Engagement:
  Register with Qatar’s National Counter-Terrorism Committee (NCTC) to access up-to-date UNSC and domestic designations and related directives.

• Alert Handling Protocols:
  Implement procedures to monitor and respond to alerts issued by the NCTC and QFCRA, including those related to UNSC listings, domestic sanctions, and Proliferation Financing freezing orders.

• System Integration and ESS Response:
  Integrate your sanctions controls with ESS (Electronic Submission System) as needed, and define internal responsibilities for monitoring, flagging, and resolving ESS-related actions.

3. Screening Mechanisms

• Screening Coverage:
  Ensure screening controls apply to both customer data and financial transactions. Define how often screening occurs and distinguish between real-time and periodic checks.

• Automation and Logic:
  Use automated tools where feasible to minimize human error. Clearly outline whether screening relies on real-time processes, batch updates, or a combination.

• Name Matching Techniques:
  Adopt a multi-layered approach to matching names. Avoid relying solely on exact matches, incorporate fuzzy matching, phonetic logic, and linguistic variations to account for transliteration differences, especially with Arabic names.
  

4. Alert Resolution and Decision-Making

• Match Classification and Workflow:
  Define how alerts are categorized (e.g., partial, true positive, false positive) and what steps are taken in each scenario.

• Escalation and Reporting:
  Assign responsibility for decision-making and establish protocols for escalating sanctions hits. Include provisions for:

• Account closure

• Transaction blocking

• Asset freezing

• Internal and external reporting (e.g., to QFCRA)

• Evaluating whether a Suspicious Transaction Report (STR) is required

• Managing customer communications in a way that avoids regulatory breaches such as ‘tipping off’

5. Training and Awareness

• Staff Competency
  Conduct regular training tailored to employee roles, especially for staff directly involved in compliance, operations, and front-line customer interactions. Set training frequency based on exposure and risk relevance.

Screening Frequency and Protocols in Qatar's Financial Sector

Effective anf timely screening practices are essential for ensuring compliance with both international and local sanctions regulations in Qatar's financial sector, protecting institutions from risks associated with sanctioned entities and individuals.

1. Initial and Ongoing Screening:
   Financial institutions in Qatar must screen customers against applicable sanctions lists before establishing a business relationship or processing a one-time transaction. Ongoing monitoring should also be in place, including real-time screening of both customer transactions and their counterparties throughout the duration of the relationship.

2. Timely Response to Updates:
   Institutions must act promptly upon the publication of any new sanctions by the United Nations, as well as on the release of Proliferation Financing (PPO) orders or local freezing measures. Any changes should be immediately reflected in the screening system to ensure compliance with both international and domestic sanctions.

3. Trigger Event Screening:
   Additional screening should be carried out whenever there are significant changes in the customer’s profile, such as alterations in ownership, changes in company directors, or shifts in major shareholders. This helps ensure that any evolving risk factors are captured.

4. Data Entry for Continuous Screening:
   Key customer details, including those of connected parties, appointed representatives, and beneficial owners, should be recorded in the firm's database. This ensures that any changes to the customer’s status, such as becoming subject to sanctions, are swiftly detected during routine screenings, even after the relationship has been established.

Read more: Anti-Money Laundering Laws in Qatar: An Overview

System Configuration and Name Matching Standards in Qatar

When setting up sanctions or AML screening systems, firms should avoid relying solely on exact name matches. Instead, it's essential to account for variations in spelling and partial name matches, particularly for customer and entity names written in non-Latin alphabets, such as Arabic. This is because Arabic names can be transliterated in multiple ways, depending on dialect, pronunciation, or personal preference. 

For example, the Arabic name "محمد" might appear in records as Mohamed, Muhammad, Mohammed, or Mohamad. Without flexible matching rules, such variations can cause true matches to be missed, posing a compliance risk.

How to address this?

To address this, firms should implement advanced name matching techniques, such as fuzzy matching, which allow the system to detect close or approximate matches. This method should be carefully calibrated according to the firm's risk profile to ensure effectiveness without creating excessive noise. Since fuzzy matching tends to generate a higher number of alerts, it's crucial that compliance staff are equipped to review and investigate these alerts using reliable Customer Due Diligence (CDD) information.

All screening activities must be properly documented, including the handling of alerts, investigations, and the resolution of false positives. This ensures transparency and supports regulatory accountability.

Read more: Sanction Screening in the UAE: What to Do if a Customer is Listed

Consequences of Non-Compliance in Qatar

Failure to comply with the sanctions and Anti-Money Laundering (AML) regulations in Qatar can lead to severe consequences, both financially and legally. Qatar’s legal framework, particularly Law No. (20) of 2019 on Combating Money Laundering and Terrorism Financing, ensures that institutions maintain the highest standards of compliance.  

1. Penalties for Non-Compliance

Under Qatar’s AML/CFT Law, institutions and individuals face significant penalties for failing to comply with sanctions regulations.

1. Fines and Imprisonment for Individuals:

1. Directors, board members, executives, or authorized representatives of financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) can face imprisonment for up to two years and fines ranging from QR 5,000,000 to QR 10,000,000 for contravening the provisions of the law (Article 82).
   

2. Penalties for Disclosing Suspicious Transactions:

1. Under Article 84 of the AML/CFT Law, any individual who discloses information related to suspicious transactions or reports—whether it’s that a report has been submitted or not—faces imprisonment for up to three years and a fine of up to QR 500,000.

3. Corporate Penalties:

1. Legal entities such as financial institutions or DNFBPs are also subject to corporate fines. Under Article 44, a financial institution found violating AML/CFT regulations can face daily penalties ranging from QR 25,000 to QR 100,000 per violation. For severe cases, fines can reach as high as QR 100,000,000. The company could also face restrictions on operations, suspension, or even a revocation of licenses.

2. Legal persons (companies) found benefiting from violations could be fined between QR 4,000,000 and QR 8,000,000, or up to three times the maximum fine applied to the offence, whichever is greater (Article 77).

4. Regulatory Actions for Continued Non-Compliance:
   

1. If a financial institution fails to comply with regulatory requests or timelines, the Qatar Financial Intelligence Unit (QFIU) will take escalating steps. These include issuing reminders, followed by warnings, and eventually reporting continued non-compliance to supervisory authorities, which could trigger both administrative and financial penalties (QFIU Procedures).
   

2. In extreme cases, supervisory authorities may impose further actions, such as appointing a special administrator or suspending or revoking the institution’s license to operate in Qatar.
   

2. Reputational Damage

Beyond the legal and financial penalties, non-compliance with Qatar’s sanctions and AML regulations can severely damage an institution’s reputation. Qatar’s financial sector places high importance on maintaining international standards of financial integrity. Institutions found in violation of these laws risk losing trust among clients and regulatory bodies, both in Qatar and globally. This reputational damage can have long-lasting impacts, affecting business operations, customer relationships, and future regulatory interactions.

3. Impact on Management and Personnel

If an institution violates the law, directors, board members, and executives are directly accountable. In addition to financial penalties, they may face restrictions on their ability to continue working in financial services, either temporarily or permanently, depending on the severity of the violation. Moreover, they could be subject to additional penalties, including the suspension or removal from their positions (Article 44).

Read more: Sanctions Screening in Saudi Arabia: Regulations, Challenges, and Best Practices

What to Do if a Customer is Listed on a Sanctions List?

When a customer appears on a sanctions list, financial institutions in Qatar must take immediate and well-defined actions to remain in compliance with the country’s regulations.

Step 1: Verify the Match

The first action upon detecting a potential match with a sanctions list is to confirm the identity of the customer. This involves comparing the customer’s details against several sanctions lists, including:

• The UN Security Council’s sanctions list,

• Qatar’s domestic sanctions list, and

• Other relevant international lists such as those maintained by the EU or OFAC.

Read more: Identity Verification in Kuwait: Requirements & AML Best Practices

Step 2: Take Immediate Action

Once the customer’s status as a listed individual or entity is confirmed, the financial institution must act swiftly:

• Freeze the customer's assets immediately, preventing further transactions or transfers.

• Block any pending transactions connected to the sanctioned customer, ensuring no funds are moved to or from the blocked party.

Step 3: Notify Authorities

Financial institutions must inform the relevant local authorities about the sanctions-related match. In Qatar, this includes notifying bodies such as:

• The Qatar Financial Centre Regulatory Authority (QFCRA), and

• The National Counter-Terrorism Committee (NCTC).

The report must include comprehensive details about the listed customer and the steps taken to comply with sanctions. Quick and transparent communication is essential for ensuring that authorities are informed and can act accordingly.

Step 4: Investigate and Document the Case

A thorough investigation is critical. The financial institution should:

• Review the customer’s transaction history to identify any previously facilitated transactions that may have violated sanctions.
  

• Investigate the nature of the customer relationship to determine if there are further risks.

Every step of this process must be documented, ensuring that the institution can provide a clear audit trail for regulators. These records should be kept for a minimum of five years, in line with Qatari regulatory requirements.

Step 5: Take Corrective Actions and Report Suspicious Activities

Based on the findings, the institution may need to take corrective actions, such as:

• Closing the account of the sanctioned customer,

• Blocking further transactions with them, and

• Reporting any suspicious activities to authorities, which could include filing a Suspicious Transaction Report (STR).

Achieve Full AML and Sanction Screening Compliance in Qatar with FOCAL

In Qatar, ensuring full compliance with AML and Sanction Screening regulations is made straightforward with FOCAL's tailored solutions. FOCAL offers advanced tools such as Customer Risk Scoring and Customer Screening, enabling financial institutions to effectively evaluate and monitor customer profiles in line with both Qatari regulations and international sanctions.

The Transaction Screening tool provides real-time monitoring of financial transactions, ensuring businesses can swiftly identify and block any dealings involving sanctioned individuals or entities. FOCAL's integrated AML Compliance solution streamlines these processes, supporting thorough Customer Due Diligence (CDD) and ensuring compliance across all stages of the customer relationship.

By adopting these tools, Qatar’s financial institutions can seamlessly meet the rigorous requirements set by local regulatory bodies while mitigating the risk of financial crimes. FOCAL’s automated system minimizes the need for manual interventions, boosting both accuracy and efficiency, allowing institutions to maintain smooth operations while meeting all compliance obligations.