Sanction lists are growing daily and sanctions published by the multiple different issuing bodies don’t always align. Coupled with this, the definition of sanctions is broadening and is becoming more open to interpretation, making it more difficult than ever for businesses to effectively identify and manage sanctions risk. Our best practice guide on sanctions screening provides useful advice to help you overcome these challenges.
A sanction is a preventative measure often implemented by governments and international bodies to change behaviour, prohibit illicit activity and curb undesirable actions by certain high-risk persons or groups.
A sanctions list is a compilation of individual sanctions that can be applied to individuals, countries, groups or companies. Sanction lists are often collated by governments or international bodies such as the European Union.
Financial crime compliance costs have escalated, requiring greater focus on operational efficiency in KYC/AML. Streamlining data acquisition processes, creating common data lakes and investing in enriching customer and third party data, are highly recommended.
Solutions should be capable of handling multiple lists, batch screening, and be able to set up predefined searches tailored to an organisations risk exposure and policies.
Screening activities should draw from extensively researched and continuously updated global risk information incorporating the latest PEP and sanctions lists, adverse media and enforcement records from around the world.
Sanctions Screening Tip 1:
It’s critical that customer data is up-to-date and it’s worth investing time, upfront, to cleanse and prepare data. Incomplete or inaccurate data will result in false positives and when companies are screening millions of customers daily, this can become a real problem.
Where possible, it is prudent to use data enrichment software to append secondary identifiers, such as date of birth, address and nationality for individuals, or business address and registration number for companies. This will help screening platforms to focus results and will greatly improve process efficiency, saving time in unnecessary remediation, which can take up to 18 hours for a single match.*
Sanctions Screening Tip 2:
It’s important to ensure that the sanctions screening software you use to support your screening is fit for purpose. Here are some of the key considerations you should take into account:
The sanctions screening software you use to support your sanctions checks has to be both stable and scalable, enabling you to screen the volumes of customer and transactions that your business requires. For many companies, this will amount to millions of records daily.
Does your technology provider have the resource and infrastructure to ensure your screening and onboarding systems are operationally resilient in the long term?
The technology platform should be easy to use and offer configurable risk-based settings, so that you can avoid over-screening and adjust screening criteria to match your organisation’s risk appetite.
The platform should also have workflow tools to manage the remediation of sanctions matches in a logical fashion.
Having industry-proven functionality and the ability to automate tasks is vital, as this will help ensure the process is effortless and efficient all the way through from the initial loading of files, through to the results.
Sanctions Screening Tip 3:
To ensure you are identifying sanctions from all relevant bodies, the data you screen your customers against must be comprehensive and up-to-date and, ideally, consolidated all in one place with other watchlist databases such as politically exposed person lists.
Some businesses rely on search engines to locate such information, but this is inefficient and could leave your organisation exposed to sanctions breaches and reputational risk.
Full coverage of global sanctioning bodies requires multi-lingual research experts around the world to collate the information on a 24/7 basis.
Whilst the data within sanctions listings must be returned as originally published, the best researchers will add value by providing additional contextual information. The same research can also apply to politically exposed persons to ensure profiles are fully substantiated. What is a PEP?
An individual or business could be listed on any number of the multitude of sanctions lists. Consolidating all associated sanctions listings into a single view could improve efficiencies, and help avoid missing any sanctions.
Conversely, screening against data taken solely from the relevant authority may be more efficient – consider whether your data source offers both options.
Sanctions lists come in a variety of formats and sizes. Being able to view them in a standardised fashion, whilst retaining the original data as published, can enhance the sanctions review process.
Sanctions listings are always changing, with new sanctions being added and existing ones amended or retracted. Being aware of change at the earliest possible opportunity following a sanctions notice, is critical.