In the parlance of anti-money laundering (AML) programs, sanctions screening is a control measure that financial institutions like banks use to detect and assess their exposure to agents of financial crime. In practice, sanctions screening involves comparing the financial institution’s customer data and payment-related data with information released on sanction lists from global law enforcement. Some examples of sources that banks involve in their sanctions screening and know your customer (KYC) processes are watchlists, lists of politically exposed persons (PEPs), and enforcement records among others. 

A solid framework for sanctions screening and KYC is needed not only to protect the bank from doing business with financial criminals, but also to keep its AML program compliant with standards set by regulators. In this regard, for a bank’s sanctions screening processes to actually work, staff need to pay attention to two key components: their customer data and their transaction data. More often than not, these are the best indicators of whether bad actors have entered the banking system and whether money has started moving into illicit accounts for money laundering, terrorist financing, and other criminal activities. 

That said, sanctions screening often proves troublesome for banks because it is time-consuming, tedious, and subject to constant change. Banking leaders may want to do their best to protect their assets as well as avoid geopolitical tension with international law enforcement agencies, but they may be too overloaded or lacking in technological resources to catch up with ever-evolving sanction lists and regulatory requirements. Part of the solution may lie in new sanctions screening software that can screen huge volumes of customer and transaction data with greater speed and accuracy. Your own bank may be able to solve its sanctions screening woes by investing in an analytics-powered solution with the following capabilities:

Automated and Pattern-Driven Investigations 

At its core, a well-designed, analytics-powered sanctions screening solution should be able to help your bank enact quick, accurate, and efficient investigations. Some features that you should expect to be on your solution are the following:

  • Automated consolidation of up-to-date data from global sanction lists, news reports, and other relevant sources
  • Swift data collection, straight-through screening, and instant generation of sanctions screening and KYC reports
  • Fast and precise matching of your bank’s data and data from sanctions lists 
  • Real-time alerts on potentially suspicious transactions with connections to these sources
  • Identification of patterns and relationships among your bank’s data and data culled from other sources
  • Comprehensive breakdowns of specific transactions for more detailed analysis

When your bank relies mostly on manual processes to complete its sanctions screening and KYC, it can be hard to put two and two together as well as to break out of the “piecemeal” mindset towards resolving investigations. But a solution with extensive automation capabilities and a single source of truth for both internal and external data will grant your bank a 360-degree view of your organization’s transactions. In turn, you’ll be able to glean comprehensive knowledge about potential sources of risk to your assets and the patterns or trends that usually antecede these risks. 

Effective Risk Mitigation Achieved by Assessment, Precision, and Control

You should also be able to optimize your staff’s sanctions screening workflows by using a feature like an integrated risk scoring engine. The engine can calculate the risks associated with a particular entity or transaction based on their country of origin, type of entity (e.g., individual, corporation, etc.), the nature of the transaction (e.g., import/export, financial transfer, etc.), and any other relevant information about the entity or transaction that may indicate criminal behavior. Cases that are given high risk scores can be opened up for further investigation, while those that have lower risk scores can be given the green flag for further engagement with your bank. 

Your new sanctions screening software should also allow you to configure screening rules and criteria according to your specific needs and requirements. In addition, it must wield a powerful capability to search across multiple jurisdictions to identify sanctioned persons. This is because certain entities and individuals may be sanctioned by more than one jurisdiction, and a solution that can only search within a single jurisdiction at a time may miss out on the chance to respond quickly to a perpetrator. 

Different jurisdictions often have different sanctions regimes, or sanctions implemented to the persons or entities involved. Only a multi-jurisdictional screening solution will be able to account for these differences. For example, while some global jurisdictions may only impose financial sanctions, others may also ban travel or restrict exports. To be able to keep track of everything, you’ll need a solution that can guarantee you that kind of granularity with your sanctions screening. 

Intuitive and Responsive UX/UI

Lastly, despite how robust and sophisticated your new sanctions screening software is meant to be, it will only grant you full returns on your investment if your staff can become confident about using it. Sanctions screening is an area of financial crime and compliance management (FCCM) that puts a lot of pressure on human staff, with very human ramifications like political conflicts and damage to companies’ reputation. 

Knowing that, you should invest in an analytics-powered sanctions screening solution that can empower the human resources in your bank’s AML team. If it minimizes crucial mistakes like false positives—or even worse, false negatives—and if it streamlines investigation protocols to be more productive and more reliable, then it won’t be long before you get your ROI and become even smarter about sanctions screening.  

Use Your New Solution to Protect Your Bank and Your Customers 

Making big investments for your FCCM program is not just an issue of improving your bottom line. By strengthening your system for sanctions screening and KYC, you’ll do your part in protecting your bank, the rest of your locality’s banking system, and your customers from the taint of financial crime. You’ll also do your share to help international law enforcement narrow the escape routes for suspicious persons, thus reducing the amount of damage they can do across borders.   

Upgrade to a trustworthy analytics-powered solution to master the task of sanctions screening and to gain the upper hand over bad actors. Now’s the time for your bank to take a more proactive stance on mitigating risk and combating the rise of crime.

Author

  • Lester Brock

    Editor in Chief Editor-in-Chief of CTE Solutions, Lester is a tech security analyst, cybersecurity professional, and a white hat hacker.