Top 4 benefits of a real-time sanctions screening solution

With the increasing demand for instant payments, financial institutions (FIs) face the challenge of imposing faster sanctions screening processes. Sanctions can be imposed quickly, making it necessary for firms to stay updated with the latest changes to prevent sanctions violations. Failure to comply with sanctions, even accidentally, can lead to hefty fines, damage to reputation, and even imprisonment.

Implementing a real-time sanctions screening solution can solve this challenge. This can help firms maintain sanctions compliance and reduce the time and cost spent on alert remediation. 

Benefits of real-time sanctions screening

While anti-money laundering (AML) compliance is essential in preventing financial crimes, it is somewhat distinct from sanctions compliance, which focuses specifically on adhering to international sanctions regimes. Real-time sanctions screening is a critical component in this area. It provides immediate risk identification and allows organizations to swiftly flag transactions involving individuals, entities, or countries on sanctions lists. This proactive approach mitigates the risk of processing illicit transactions and ensures FIs remain compliant with sanctions regulations.

This article explores four of the top benefits.

1. Protecting a firm from reputational damage

Reputation is a critical asset for companies, with global executives attributing 63 percent of their company’s market value to its reputation, according to KRC Research. Real-time sanctions screening plays a crucial role in protecting this valuable asset by addressing risks as transactions occur, thus eliminating the need for periodic or manual reviews. This continuous monitoring helps firms avoid both legal penalties and significant reputational damage.

For example, a major FI briefly lost 5.6 percent in the value of its shares after allowing a £250 cash withdrawal by a sanctioned individual, even though the Office of Financial Sanctions Implementation (OFSI) chose not to impose a fine. 

2. Great agility and scope to scale

Real-time sanctions screening can offer unparalleled agility and scalability, allowing firms to adapt swiftly to evolving sanctions landscapes. In an era where global sanctions regimes are becoming increasingly intricate and subject to frequent changes, businesses must stay ahead of the curve to ensure compliance. A real-time solution empowers firms to navigate this complexity without hindering their ambitions for growth and expansion into new markets. By continuously monitoring transactions and updating sanctions lists in real-time, FIs can identify and mitigate risks promptly, regardless of their scale or geographic footprint.

Moreover, the scalability of real-time screening solutions allows firms to accommodate growing transaction volumes without compromising on efficiency or accuracy. As businesses expand their operations, they need robust compliance measures that can keep pace with their evolving needs. Real-time screening platforms offer the scalability necessary to handle increasing transaction volumes while maintaining the same level of effectiveness in identifying potential sanctions violations. This scalability ensures that FIs can scale their operations seamlessly without being weighed down by compliance concerns, thus enabling them to pursue their growth objectives confidently in a dynamic regulatory environment.

3. Improving sanctions screening efficiency

Real-time screening brings a proactive dimension to the due diligence process, empowering organizations to continuously monitor transactions and customer profiles. This can help quickly identify any associations with sanctioned entities, meaning potential risks are spotted as soon as they emerge, enabling timely intervention and mitigation. 

Solutions that are API-led offer further efficiency gains, as firms can integrate the software seamlessly into their compliance workflows. Such solutions can also be tailored to align with a firm’s risk appetite and compliance requirements. They can adapt to varying transaction volumes, different customer segments, and evolving regulatory landscapes. This adaptability ensures that organizations can efficiently and effectively target potential violations to suit their unique needs.

For example, embedded finance platform Alviere accesses ComplyAdvantage’s sanctions screening solution via a highly sophisticated headless integration. This allows the two platforms to connect via an API to communicate with one another. In this case, the APIs automatically interface with ComplyAdvantage on the backend, delivering information from ComplyAdvantage to Alviere’s teams and analysts via their in-house portal. This allows them to make crucial decisions without manually contacting ComplyAdvantage’s back office.

4. The moral imperative

The impact of robust sanctions compliance extends beyond regulatory requirements, directly influencing geopolitics and international relations. By swiftly identifying and blocking transactions involving sanctioned individuals and entities, real-time screening systems contribute to cutting off the flow of funds to those engaged in illicit activities or human rights abuses. This not only bolsters global efforts to combat financial crime but also promotes accountability and justice on a global scale.

By preventing the movement of funds by sanctioned entities, real-time screening helps curb bad actors’ ability to finance destabilizing activities or circumvent sanctions imposed by the international community. This contributes to a more stable and secure global financial system, fostering trust and cooperation among nations. Ultimately, the implementation of effective sanctions screening measures aligns with broader humanitarian and ethical principles, as it deprives oppressive regimes and illicit actors of the resources they need to perpetuate injustice and harm.

Advanced real-time sanction screening solutions

In the face of constantly changing sanctions lists and increased regulatory expectations, organizations must adopt a risk-based approach to sanctions compliance. A minimalistic approach to detecting potential sanctions exposure is no longer sufficient. Firms should assess the challenges their current screening software poses and consider the advantages of implementing a sanctions risk management solution with real-time screening capabilities.

ComplyAdvantage’s watchlists and sanctions screening software offers the following benefits to firms: 

• Up to 83 percent reduced onboarding times by customizing the sanctions screening program according to a risk-based approach. 
• Up to 66 percent increased straight-through processing through automated flows via our API and granular data segmentation.
• Reduced false positives. 
• Automated ongoing monitoring by eliminating delayed flat file uploads. 
• Integration with existing tools by connecting data feeds, case management systems, and CRMs to match existing workflows through industry-leading API integration.