India Inc. ramps up checks to avoid sanctioned entity deals

A tightening global sanctions and tariff regime, led by the US, is pushing Indian firms to step up background checks before finalising transactions such as mergers and acquisitions, supply contracts, and trade deals.

- Yash Tiwari & Devina Sengupta

Legal experts Mint spoke with said companies are hiring law firms and investigative agencies before closing deals to ensure that none of the parties involved, including subsidiaries, parents or suppliers, feature on sanctions lists.

Clients are now required to sign sanctions standard operating procedures (SOPs) before finalising deals, which mandate disclosures such as ultimate beneficiaries, end-use certificates, and verification of licensed vendors.

The purpose is to ensure that companies do not deal with sanctioned entities, thus preventing frozen assets, blocked payments, or stalled deals amid geopolitical tensions.

"With growing awareness, turbulent global environment and growing tariff and sanctions regime, sanction checks are carried out on large and key vendors at a pre-transaction stage. Further, post transactions, clients are asking us to implement third-party diligence programs in the acquired company and also have a real-time sanctions screening process," said Tarun Bhatia, managing director and APAC co-head at financial risk and advisory firm Kroll.