Fenion launches sanctions screening for funds

With fund investments, the control chain usually breaks

For direct holdings, sanctions screening is well established in most institutions: securities and counterparties are matched against the relevant lists, hits are documented and processed.

Fund investments are different. The fund itself does not appear on a sanctions list – the instruments inside it very well may. Answering the question anyway requires three things at once: current portfolio data at sufficient depth, reliably maintained sanctions data, and logic that brings both together and documents the match in a traceable way.

In practice, it is this combination that fails. Not the check itself.

The effort sits in the data plumbing, not in the check

Conceptually the task is straightforward: match positions against lists. The effort arises before and after.

Portfolio data comes in different formats, as-of dates and levels of aggregation. Sanctions data has to be sourced reliably, kept current, and mapped onto identifiers that actually match your holdings. With funds of funds, the relevant positions only become visible several levels down. And for internal control as well as for any later audit, every hit has to remain explainable.

For a single portfolio, that is manageable. Across a larger fund universe, it becomes a data management project.

What the service does

Fenion provides sanctions screening for funds centrally, via its existing platform. Clients use the service without building their own connections to sanctions data sources and without operating additional systems:

• Screening on a look-through basis – sanctions-related positions are identified at the level of individual instruments and issuers; for funds of funds, across any number of levels.
• Traceable results – every hit is reported with instrument, issuer, list reference and as-of date.
• No data connection of your own – the required sanctions data is provided centrally and kept current.
• Fits into existing processes – delivery in your existing formats and interfaces, aligned with your compliance and risk workflows.
• Audit-proof – like all Fenion services, ISO 27001 certified and DORA compliant.

What 15,000 fund portfolios tell us about sanctions-related legacy exposure

Ahead of the rollout, we applied the service to a broad fund universe. Two things stand out.

First: 4.3% is not a rounding error. In a universe of 15,000 funds, that is several hundred portfolios with at least one flagged position – frequently legacy holdings that have drifted out of view.

Second: the exposure is highly concentrated. Roughly 280 unique instruments account for around 6,000 positions. The same securities therefore appear about 20 times each across the universe. What looks like an isolated special case at the level of a single institution is a recurring market-wide pattern – and exactly the kind of check that is far more efficient to run centrally than separately in every house.

Data basis

For sanctions data, Fenion works with WM Daten. Their data is integrated into the Fenion platform in a way that lets clients use the screening without complex data connections of their own. The cooperation with WM Daten has been in place for many years and is being extended further with this use case.

Interested?

Sanctions Screening for Funds is available now. We are happy to show you in a short call how the service fits into your existing processes – and what a screening of your fund holdings returns.