4 Common Roadblocks to Effective Sanctions Screening
At the outset, the implementation of sanctions screening—or the checking of banking clients’ names and credentials against sanctions lists, watchlists, and other documents provided by global law enforcement parties—may seem simple. An outsider to the financial industry may think that all a bank needs is access to the details. If access is guaranteed, and if the names and methods of suspicious outfits are laid bare, then cross-checking them against incoming customer enrollments and transactions shouldn’t be a problem.
But as you may be aware, it’s a lot more complicated to roll out an effective sanctions screening program for your own bank’s anti-money laundering (AML) and financial crime compliance (FCC) teams. Rapidly changing law enforcement guidelines, inadequacies in your current screening and matching processes, and the sheer volume of data to look out for are just some of the issues that may get in the way of successful sanctions screening.
All the same, a bank that does not have full control and visibility over its sanctions screening processes will remain vulnerable to the wiles of bad actors. If an organization were to fall victim to a financial crime, this event could permanently taint its reputation among its legitimate banking customers.
Common Roadblocks to Effective Sanctions Screening
Truly, the importance of implementing these precautionary measures cannot be understated. For your bank to roll out an efficient sanctions screening program, train your focus on these four major roadblocks. Addressing these issues will be key in safeguarding your financial institution from bad business.
1. An Overloaded System for Processing High Transaction Volumes
One of the most glaring issues in inefficient sanctions screening processes is the ease with which their systems can get overloaded by large transaction volumes. If a high volume of transaction data were to be entered into a system that has no technological improvements in the way it streamlines and monitors it all, some cases are bound to fall through the cracks.
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As such, if your bank wants to enjoy the growth that comes with expansion, you need to replace your outdated legacy technologies with solutions that can handle the load. Invest in technology that you can trust to be comprehensive with your transaction data as well as evolving sanction lists and international law enforcement directives.
2. Lack of Precision in Matching and Screening
Another roadblock that may be threatening the success of your sanctions screening program is your ability to screen, match, and verify cases of concern. Under-screening or screening against inconsistent or badly managed data can yield a dangerous number of both false positives and false negatives. By the time your team is done verifying actual matches, some of the bad actors in question may have already kicked off their dastardly schemes.
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Even if your bank has continuous access to watchlists and other pertinent documents, it will be for naught if you cannot match these details properly with those in your database. Your program will definitely benefit from adopting an integrated approach to sanctions screening as well as technologies that enable faster, more accurate, and more customizable transaction filtering capabilities.
3. A Narrow Scope for Identifying Sanctions
Speaking of cases that merit concern, banks may fail to flag these due to their limited scope for sanctions screening. They may not be able to keep up with sanction lists and law enforcement guidelines, which are constantly changing in real-time. In addition, the screening system may not be able to account for the various complexities involved in collecting and matching data. One example is any data formatting that’s different from the bank’s standard due to the inclusion of alphanumeric characters that are only used in certain languages.
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It is dangerous to assume that you don’t need to widen your bank’s scope for identifying sanctions because of your size, location, or the nature of your clientele. Instead, you should address this roadblock to your sanctions screening program by identifying threats from a 360-degree vantage point. Doing so is a much more effective way of keeping your assets safe.
4. An Inefficient and Siloed-Off Screening Process
Many banks deploy a two-pronged approach to their general screening process, which involves separate steps for customer screening (like during customers’ enrollment and onboarding) and transaction monitoring. But in truth, this approach often creates many unnecessary silos in the screening workflow. Consequently, AML and FCC staff may find themselves doing more work than necessary. If your teams are stretched too thin, it also means that there’s a higher likelihood of a bad actor going undetected.
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Make it a point to streamline both your customer screening and transaction monitoring processes so that they’re more cohesive and so that they leave little demand for manual adjustment. In the long run, this will help you and your staff achieve greater operational efficiency when carrying out AML and FCC tasks. Running a tighter ship will mean increasing your general focus and timeliness for all things related to sanctions screening. This, in turn, will act as your best defense against international criminals.
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When revamping your sanctions screening processes, don’t forget the needs of your legitimate customers. The ideal screening program is one that can swiftly and accurately identify global threats without alienating local and international customers with the best intentions. Optimize your screening methods and clear the roadblocks for the people who matter—that is, the customers who are guaranteed to bring good business to your bank.