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.

The post Top 4 benefits of a real-time sanctions screening solution appeared first on ComplyAdvantage.

This article presents five tips for compliance leaders to consider when selecting the best sanctions screening software for their company.

1. Ensure the software is comprehensive and future-proof

When evaluating sanctions screening software, a meticulous analysis of its key features will form the cornerstone of a thorough assessment. Among these features, real-time screening is paramount, offering organizations the critical capability to respond promptly to evolving threats. Complementary to this, fuzzy matching functionalities can contribute to the precision and accuracy of the screening process, mitigating the risk of overlooking potential matches. Equally, the software’s ability to manage false positives effectively can directly influence a firm’s operational efficiency and resource allocation, and configurable rules further enhance adaptability, enabling organizations to tailor the screening tool to meet their specific requirements.

However, beyond the technical functionalities, a forward-looking perspective becomes essential. When analyzing the key features of sanctions screening software, organizations should confirm if the solution will serve the roles of all key stakeholders in their fraud and AML (FRAML) program, including analysts, team leaders, and chief risk officers. Specifically, firms should ask if the solution empowers users to implement role-based access.

Automation, a linchpin for cost-effective compliance, introduces a practical dimension to the evaluation process. Identifying repeatable tasks and assessing the extent to which the solution automates these tasks are pivotal considerations that directly impact overall operational efficiency.

Moreover, the software’s alignment with a risk-driven approach is a crucial aspect of the analysis. Organizations must scrutinize the software’s capacity to implement risk policies effectively, dynamically score customer and case risks, and seamlessly integrate into existing workflows. This ensures a holistic and proactive risk management strategy.

Considering the broader workflow, the evaluation extends to whether the chosen software provides a comprehensive screening solution or necessitates additional tools from different vendors. Opting for a platform-based approach can prove advantageous, fostering a unified view of customer risk across various workflows and business units. This approach streamlines processes, triggering automatic responses, such as enhanced monitoring, based on outcomes from transaction monitoring.

2. Determine the sanctions screening data available

To ensure effective sanctions screening, it is important to determine the vendors’ available data and ensure the software has appropriate data integrations to cover the jurisdictions and territories where a firm operates and provides services. Ideally, firms should prioritize vendors that offer a combination of software and proprietary data. This approach provides several benefits, including the ability to avoid shopping around and maintaining multiple vendor relationships and contracts. For larger financial institutions, the procurement exercise alone can cost hundreds of thousands of dollars.

Another advantage of sourcing both the software and data from a single vendor is that the software and data are closely linked from the start. The software is built to navigate through the data better, send feedback to the data algorithms, and perform other useful functions.

However, it is also crucial to prioritize the quality of data, not just the quantity. Outdated records can contribute to high volumes of false positives, rendering screening against real-time risk much less effective. Rather, firms should consider partnering with a vendor that uses teams of global data experts to review and edit problematic profiles to ensure the AML/CFT data acquired by machine learning algorithms is accurate and up-to-date.

3. Make sure the software is compliant with the AML regulations

Since non-compliance with sanctions regimes can lead to hefty fines, reputational damage, and legal repercussions, finding a screening solution that aligns with AML regulations will be top-of-mind for compliance teams. A key aspect to look out for when assessing multiple sanctions screening solutions is the software’s ability to access and incorporate updated sanctions lists from reliable sources. These lists, maintained by government agencies and international bodies, include individuals, entities, and countries subject to sanctions or restrictions. By accessing up-to-date lists, the software can help firms stay ahead of regulatory requirements and minimize the risk of inadvertently engaging with sanctioned entities.

In particular, features like automatic updates and alerts for changes in sanctions lists should be prioritized, as they can help enhance compliance efforts and enable proactive risk management. 

4. Consider the integration and technical aspects

How vendors implement their clients’ AML programs is critical. A slow implementation process risks undermining the customer experience and delaying the roll-out of new products and services. Poor support over time can become a chronic issue weighing compliance teams down if, for example, the ability to add new rules and capabilities is impacted. But what does ‘good’ look like regarding integration, and what technical aspects should be prioritized? 

• Compatibility and integration: Senior decision-makers should make sure to evaluate how well the software is integrated with their firm’s existing systems and assess the level of support the vendor will provide during the integration process to ensure a smooth transition without disruptions. 
• Scalability and performance: Ensure the software can handle increasing data volumes and transactions as your business grows, ensuring it meets operational requirements without compromising performance.
• API response times: Check for fast and consistent API response times to minimize transaction processing delays and ensure seamless operations. 
• UI and UX: Assess the user interface for intuitiveness, ease of navigation, and accessibility, looking for features such as customizable dashboards and multi-language support to enhance user productivity. 
• Configurability: Look for a high degree of configurability in screening rules, alert thresholds, and risk parameters, enabling easy adaption to evolving compliance requirements without extensive technical support.   

5. Check the vendor’s reputation

Finally, it’s important to choose a reliable vendor in the industry to ensure business continuity and increase operational resilience. Securing comprehensive software, good data, and the right price doesn’t guarantee a sustainable relationship with a vendor. The quality of support the vendor is able to offer, if and when a firm needs it, is what underlines this. 

Even if assistance isn’t verbally requested, would the vendor still seek to help compliance teams make the most of the solution in improving their efficiency and reducing their risk and cost of compliance? There will be times when unusual reports or a unique screening feature is required. Will they provide the necessary support then (and with a smile)? These are the things that make the vendor-customer relationship a happy one. The best way to check this before becoming a customer is to connect with the vendor’s existing customers.

Sanctions Screening with ComplyAdvantage

Hundreds of FIs worldwide rely on ComplyAdvantage for a sanctions screening solution. Whether they’re conducting thousands of checks a month or less than a hundred, they benefit from:

• Fully automated screening and monitoring that pushes system-wide updates every hour based on global sanctions lists, watchlists, adverse media, PEPs, and warning lists.
• A completely integrated experience that combines data feeds, search, and case management into a single workflow and reduces onboarding time by up to 83 percent.
• A 66 percent increase in straight-through processing through automated flow via RESTful API and granular data segmentation that removes tens of thousands of false positives.
• Consolidated entity profiles where a single alert is generated with all the information needed to make an informed decision.
• A better workflow to assist everyday reporting, where data feeds, case management systems, and CRMs are integrated to match your workflow.

The post 5 tips on how to choose the best sanctions screening software appeared first on ComplyAdvantage.

However, many businesses face challenges implementing effective and scalable sanctions screening processes. This article explores the reasons behind these challenges and provides five best practices for effective sanctions and watchlist screening.

Challenges related to sanctions screening systems

Like many other AML/CTF processes, sanctions and watchlist screening can put intense pressure on compliance teams. For example:

• Screening protocols are a significant part of the workload of busy compliance professionals who need to balance regulatory requirements with pressure from product and engineering teams trying to optimize the quality of experience the business delivers.
• As businesses scale to new jurisdictions, the burden on those conducting checks also grows. Businesses don’t always have a clear answer for streamlining these processes; instead, they make do with outdated technology and convoluted workflows.
• Even as employees face the challenge of more alerts and false positives, regulators continue to expect robust documentation and auditability across the board.
• Firms often encounter the challenge of having to swiftly update their sanctions screening lists following rapid changes to desigations worldwide, necessitating a proactive approach to compliance.

Without the right technology and processes, sanctions screening can quickly become another weight around the neck of FIs that are often trying to compete at the pace of global competitors.

5 steps to set up an effective sanctions screening process

Given the importance of sanctions and the potential cost of noncompliance, firms should be familiar with sanctions screening best practices to ensure their AML/CFT programs deliver the required results.

1. Align sanctions screening with a risk-based approach

Aligning sanctions screening with a risk-based approach (RBA) involves tailoring the screening process to prioritize higher-risk areas. This means assessing the potential risks associated with different business activities, customers, or transactions. 

By understanding the specific risks, organizations can allocate resources more efficiently, ensuring sanctions screening efforts are concentrated where they are most needed. This approach allows for a more targeted and effective screening process, addressing the varying levels of risk across different aspects of the business. However, adopting a risk-based approach to compliance does not equate to being risk-averse. Instead, it signifies a strategic shift towards a more nuanced understanding of risks and their implications. 

Analysts are increasingly recognizing the importance of financial inclusion and the unintended repercussions of stringent sanctions. For example, in the case of countries like Afghanistan, humanitarian aid is sorely needed but is often restricted due to sanctions. The Financial Action Task Force (FATF) emphasizes the significance of financial inclusion, cautioning against overly risk-averse AML measures that inadvertently exclude legitimate businesses and consumers from the financial system. Instead, the FATF advocates for the development of risk-sensitive AML frameworks, viewing it as a crucial step for countries aspiring to cultivate a more inclusive formal financial landscape. Such frameworks not only ensure access to appropriate financial services for a broader spectrum of the population but also extend assistance to the most vulnerable and underserved groups.

2. Prioritize how data is viewed – not just  what data is viewed

Compliance teams often have to contend with outdated, inaccurate, and duplicated data spread across disparate systems. In such scenarios, hastily implemented sanctions screening processes inevitably produce false positives and waste time.

To set up a sanctions screening protocol that’s both effective at identifying matches and scalable, compliance teams must have access to a single, comprehensive profile of each customer, populated with only the most relevant screening results. An intuitive interface begets an intelligent process.

3. Zero in on the right lists at the right times

A big part of the challenge with sanctions, watchlists, and even politically exposed persons (PEP) screening is the sheer volume of lists that can be monitored globally. Businesses need to filter this global plethora to screen against lists that apply to their jurisdictions, customers, and products.

However, more needs to be done to streamline the screening process. So, it’s also important to use software to automate sanctions screening to ensure compliance teams can set risk-based alerts based on specific intervals and differentiated risk-screening levels from the onboarding phase onwards. Moreover, firms should consider how often their sanctions lists should be updated to ensure the data the software is screening against is up-to-date. To ensure excellent data quality, firms may also consider using human experts to verify any sanctions list updates, using something akin to a 12-eye review process. 

4. Integrate the right controls for rapid remediation

Efficiency and productivity are major challenges facing compliance teams. Precious time is lost when analysts switch between multiple systems to gather needed information or wait for responses from external teams or contractors. By integrating controls across disparate systems, firms can greatly improve the speed of critical onboarding and remediation processes, satisfying customers, relieving employees, and protecting themselves from risk, all with a few simple API integrations.

The integration allows compliance teams to benefit from a single, automated source of information and communication within their own platforms. This, in turn, can streamline important case and manual review decisions.

For example, Alviere, an embedded finance platform, 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. 

5. Conduct a comprehensive audit 

Finally, conducting a thorough audit of the sanctions screening process is essential to ensure its effectiveness, efficiency, and compliance with regulatory requirements. This process should begin with documenting each step of the screening process, from decision-making criteria to data collection and verification. Next, the adequacy of the screening technology and software should be assessed, examining its capabilities in terms of speed, accuracy, and scalability. Additionally, the roles and responsibilities of personnel involved in the screening process should be reviewed, providing adequate training where necessary to enhance their understanding of sanctions compliance protocols.

Following the documentation and evaluation phase, compliance teams may choose to conduct a comprehensive gap analysis to identify any weaknesses or areas for improvement in their sanctions screening process – such as data quality, technology infrastructure, and compliance. This involves comparing current practices against industry best practices and regulatory requirements. Once gaps are identified, they should be prioritized based on their potential impact on compliance and risk mitigation. A remediation plan can then be developed that outlines specific actions to address each gap, assigning responsibilities and timelines for implementation. These efforts should be regularly monitored to ensure continuous improvement and maintain a robust sanctions screening process over time.

Automation in the sanctions screening process

Even in smaller FIs, the sanctions screening process can prove to be a non-trivial burden on compliance teams. But this vital process can quickly get out of hand when a business scales to oversee hundreds of lists for thousands of clients conducting millions of transactions a year. It can hurt the customer experience, expose the business to unnecessary risk, and make compliance even more challenging than it needs to be.

This is why automation and software have come to play such a critical role in the most effective sanctions screening processes. As firms adopt more intelligent ways to serve their customers, it only makes sense that they should also adopt more intelligence to manage the risks behind these services.

With ComplyAdvantage’s fully-automated sanctions and watchlists screening software, firms can:

• Minimize false positives. 
• Quickly learn about critical changes to a customer’s risk status.
• Automate ongoing monitoring by moving away from delayed flat file uploads.
• Reduce onboarding cycle times by tailoring the sanctions screening program to an RBA.
• Streamline customer onboarding by improving alert quality with a consolidated, real-time AML risk database.
• Sync with existing tools by integrating data feeds, case management systems, and CRMs to match existing workflows via industry-leading API integration.

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An effective and dynamic partner

Given Australia’s stringent regulatory and audit requirements, Beem required a solution to help it stay compliant while screening high volumes of customers daily.

Previously, the company had struggled with several screening issues that were slowing down customer onboarding times, reducing customer satisfaction. Manual processes, for example, had led to a backlog of alerts, consuming too much analyst time.

To combat this, Beem needed a dynamic solution that offered effective customer screening services suitable for its business and jurisdiction. After searching the market, the firm met with ComplyAdvantage in 2019 and began a long-term partnership. 

“During the vendor qualification process, we were particularly impressed with the search levers, search profiles, and the easy application programming interface (API) integration that ComplyAdvantage offered.”
Jason Backhouse, General Manager Open Payments 

Reducing alert remediation times to increase efficiency 

ComplyAdvantage’s implementation specialists collaborated with Beem from the outset to understand its business model and unique challenges. Once they finished their deep dive, they presented the firm with a bespoke suite of solutions based on their findings.  

Before partnering with ComplyAdvantage, Beem was experiencing high match rates of eight percent. However, after adopting a risk-based approach using ComplyAdvantage’s customer screening and transaction monitoring solutions, Beem reduced its match hit rate to 1.2 percent by December 2023, contributing to a 10 percent increase in its AML program’s efficiency.

Automated workflows via ComplyAdvantage’s RESTful API were also introduced to improve the firm’s overall operational efficiency by freeing analysts’ time. This enabled them to resolve legitimate sanctions hits within one working day, resulting in faster onboarding and improved customer satisfaction.

Beem & ComplyAdvantage: Key benefits in numbers

• Lowered the time taken to clear new customers to within one business day.
• Lowered match hit rate to under 1.2 percent.
• Minimized time to clear new cases.
• Increased overall efficiency by 10 percent. 

Taking new risks

While both parties are pleased with the ongoing success of the partnership, new risks are always emerging. With this in mind, ComplyAdvantage’s customer success and Beem’s compliance teams continuously review their operational efficiency and hold enablement sessions to equip Beem with the latest product and feature releases – creating a positive and sustainable experience for its customers.

“Through our years of partnership, ComplyAdvantage has enabled Beem to perform at the top of our compliance game. Their commitment to excellence and our business allows us to focus on providing a better experience for our customers while maximizing security and trust in our platform and meeting the requirements of our regulators.”
Jason Backhouse, General Manager Open Payments

A collaborative approach, combined with ComplyAdvantage’s dedicated account management and support, has led to a thriving long-term partnership that has helped Beem save time, stay compliant, and continue to scale and grow as a business.

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These challenges can be addressed with solutions that access updated and reliable sanctions data and configure alerts based on differentiated risks. Read on to understand the complexity of sanctions screening in banking, its benefits and challenges, and three key improvement areas firms can focus on.

What is sanctions screening in banking?

The Sanctions screening process in banking compares customer and transaction data against organizations, goods, places, and people under government-issued sanctions or watchlists. They do this to ensure they don’t facilitate sanctions violations, which can result in fines and imprisonment. 

Banks often use transaction and customer screening tools for this purpose, which may be automated or manual. 

A sanctions screening program is essential to a bank’s broader financial crime risk management strategy. Without it, the bank risks heavy penalties. For example, US banks faced over $33 million in sanctions fines and settlements in 2023 alone – more than 18 times the figure for 2022. Between 2021 and September of 2023, sanctions violations cost individual banks an average of over $4 million.

To effectively comply with anti-money laundering (AML) in banking regulations, sanctions screening should be integrated throughout the entire customer journey as part of a comprehensive and ongoing customer due diligence (CDD) process.

Sanctions screening challenges for banks

Banks must comply with their country’s sanctions regulations, including guidance by the Office of Foreign Assets Control (OFAC) in the US and the Office of Financial Sanctions Implementation (OFSI) in the UK. When facilitating cross-border transactions, they are also subject to international sanctions requirements. 

Banks face five crucial challenges in implementing compliant and effective sanctions screening processes. 

1. Processing times for faster payments

Customers increasingly expect banks to offer faster payments. Yet their rapid nature poses challenges for banks, who must continue to screen transactions according to their risks and regulatory obligations.

The Faster Payments Council defines faster payments as a payment taking anywhere from a day to seconds or less to process. It also acknowledges definitions can be more stringent than this. For example, it points out that for the Committee on Payments and Market Infrastructures of the Bank of International Settlements, a faster payment should occur on as close to a 24/7 basis as possible.

Under either definition, banks offering faster payments are under constraints regarding which services can qualify for the term. Sanctions screening solutions that are not risk-based and tailored to unique risk levels can stop or delay so many low-risk payments that the service may not qualify as a faster payment. This means that for banks to be able to offer the service while remaining compliant, a careful review of risks, processes, and existing tools and personnel is crucial.

2. Overcompliance

Sanctions violations can result in hefty fines, so banks might assume that it’s safer to be as risk-averse as possible – for example:

• Blocking all transactions involving a sanctioned country even if they aren’t prohibited.
• Blocking a refugee’s transactions because they’re citizens of a sanctioned country.
• Refusing business to a sanctioned person, when the business relationship wouldn’t violate sanctions.

But this approach, sometimes referred to as overcompliance, can violate international law and human rights, impede diplomacy and humanitarian aid, and even drive illicit economies. UN Special Rapporteur Alena Douhan urges firms to ensure their sanctions compliance program does not exceed sanctions requirements and recommends taking actions to protect the human rights of those the sanctions might affect – including ensuring they maintain legal access to life necessities and humanitarian assistance. 

3. Screening with outdated data & tools

The US Department of the Treasury’s guide on complying with OFAC requirements lists sanctions screening software failure as one of 10 key reasons sanctions compliance programs fail. Reasons for these failures include:

• Outdated sanctions list data.
• Missing data, such as SWIFT business identifier codes (BIC) for sanctioned entities.
• Ineffective name matching that misses alternative spellings.

Effective sanctions screening depends on reliable sanctions data and effective fuzzy matching techniques, which catch close but not exact name variants.

4. Divergence among sanctioning bodies

Sanctioning bodies do not always apply economic designations consistently. This inconsistency can pose a challenge for banks as they strive to comply with regulations and avoid doing business with sanctioned entities. Following Russia’s invasion of Ukraine, for example, a raft of restrictive measures was placed on Russian individuals and companies, but there was divergence among sanctioning bodies concerning who should or shouldn’t be designated. To mitigate the risk of sanctions circumvention, banks need to ensure they’re screening against quality global sanctions data gathered straight from the source so updates to sanctions lists are not missed.

5. Ineffective transliteration capabilities 

Transliteration, the conversion of names and entities from one writing system to another, is pivotal in the context of sanctions screening. Banks deal with a myriad of international customers and entities, each with names presented in diverse scripts. The challenge arises when transliteration is not executed accurately, leading to discrepancies and potential oversights in the screening process.

Consider, for instance, a scenario where a sanctioned entity’s name is originally in a non-Latin script. If the transliteration process fails to accurately represent this name in the Latin alphabet, the screening software may overlook a potential match. This can result in a critical compliance gap, exposing the bank to unnecessary risks and regulatory scrutiny. The complexity deepens as various languages and dialects contribute to the variety of names encountered in banking transactions. Inconsistent transliteration practices across different regions and languages exacerbate the challenge, making it imperative for banks to address this issue comprehensively.

To overcome the transliteration challenge, banks are increasingly turning to advanced sanctions screening solutions equipped with robust transliteration capabilities. These solutions leverage sophisticated algorithms and linguistic expertise to accurately convert names between scripts, ensuring a harmonized and precise screening process.

Tips to improve the sanctions screening process in banking

While sanctions screening can present challenges, many of the most common ones can be addressed effectively. While each firm needs to consider its own unique business environment, five common areas of opportunities we see are: 

1. Review the calibration of screening parameters 

When screening isn’t calibrated to precise risks, firms are more likely to not only over-comply but also miss risks that would have been caught with targeted parameters. It’s therefore crucial for firms to work with subject matter experts to align their screening with precise risk indicators. This approach is more effective than casting a wide net by default.

For example, rather than indiscriminately screening any person or activity from a sanctioned country, the team could evaluate signs pointing to specific sanctions violations they’re at risk for. Are the customers they serve involved in high-risk sectors, such as semiconductors, dual-use goods, or pharmaceuticals? What jurisdictions do they typically serve? Setting parameters that could detect associations between multiple precise risk factors is more likely to catch relevant activity.

Similarly, evaluate whether the screening tool in question offers features like custom fuzzy matching. Fuzzy matching parameters allow firms to catch common name variations or deliberately changed name spellings when there’s a specific need to cast a wider net. (It’s not that wider nets are always unhelpful – they should just be used in a targeted, intentional manner).

2. Review and enhance data quality

Poor sanctions data not only undermines a risk-based approach and leads to inefficiencies, but also means firms can never be sure they are operating according to the most recent regulatory requirements. In our 2023 survey on the role of tech and talent in compliance, 47 percent of firms said they wanted to improve their sanctions and politically exposed persons (PEP) data in their transaction screening solutions. A third were frustrated with a lack of real-time sanctions updates. In our 2023 State of Financial Crime report, we saw that nearly a third of firms – 29 percent – were most focused on improving their sanctions compliance.

So what does this mean for firms? Those concerned about the quality of their sanctions data can examine their current solution with the following questions: 

• How up-to-date is the solution’s sanctions and risk data?
• What process is followed to ensure the solution’s data is up-to-date? 
• If its an ongoing process, how often is the data updated? How quickly does it become available? 
• Where is the data sourced from?

3. Assess solutions against the growing complexity of global sanctions

With the rising complexity of global compliance and sanctions data, legacy solutions can struggle to keep up. Firms using outdated solutions may find they don’t update key data in a timely manner, integrate efficiently with the rest of the compliance tech stack, or monitor risk effectively.

Newer tools can use advanced screening algorithms and make data updates multiple times per day. This can help teams process sanctions risks more effectively, streamline their workflows, and ensure the process interfaces well with the broader compliance function. 

Firms looking to improve or update their current tools can look for robust sanctions data access, flexibility in risk screening levels depending on the customer or transaction type, and automation of crucial components such as daily sanctions list updates.

4. Implement entity resolution technology

Integrating advanced entity resolution technology is pivotal for refining the sanctions screening process. This technology enhances the ability to accurately identify and link entities, reducing the risk of false positives or negatives. By consolidating multiple data points and recognizing relationships between entities, banks can streamline their screening efforts and elevate the overall effectiveness of their compliance measures.

5. Integrate real-time monitoring and alerts

To bolster sanctions screening, banks should embrace real-time monitoring and alert systems. Traditional batch processing may have its merits, but the financial landscape demands a more instantaneous response to potential risks. Real-time monitoring ensures that any suspicious activities or matches are promptly identified, allowing banks to take immediate action. The integration of robust alert systems enhances agility, enabling banks to stay ahead of evolving threats and maintain compliance in dynamic environments.

Overcome challenges with advanced sanctions screening solutions

With the rise of artificial intelligence, automation, and more powerful data processing, banks looking to align their sanctions screening tools with a risk-based approach have robust options. Solutions like ComplyAdvantage’s sanctions screening and monitoring offer advantages including:

• Configurable screening alerts: Compliance teams can account for name variants or misspellings and avoid missed sanctions violations using industry-leading screening algorithms and flexible fuzzy name matching.
• Flexible alert frequency for differentiated risk levels based on onboarding: Banks can follow a granular, risk-based approach to alerts, improving accuracy and reducing false positives.
• Automated source checks for sanctions list updates: These come straight from regulators and are checked for accuracy by human experts.
• Integrated workflows, from alert remediation to case management, using REST APIs. 

By integrating reliable data, streamlined workflows, and configurable screening technology, banks can take steps to improve sanctions compliance, cost-effectiveness, and holistic risk management for their companies. Along with regular EWRAs, these central components can ensure a risk-based approach while improving customer relations by supporting higher straight-through processing (STP) rates.

The post How to improve the sanctions screening process in banking appeared first on ComplyAdvantage.

• Politically exposed person (PEP) and sanctions screening software to improve your efficiency and accuracy.
• A quick comparison of the top available solutions.
• A clear list of features. 

This article delivers an overview of seven PEP and sanctions-screening software vendors.

Sanctions screening software: 4 features to look for

Sanctions screening software allows organizations to streamline and enhance compliance efforts while minimizing reputational damage. Here are some of the key features to watch for:

• Real-time updates: Effective sanctions screening software should provide real-time updates to swiftly reflect changes in global sanctions. With high geopolitical instability in Eastern Europe and the Middle East, sanctions lists are liable to change at short notice, meaning firms could be at risk of enabling sanctions evasion unless they can react quickly.
• Advanced entity matching: Look for software with advanced entity matching capabilities that can accurately identify variations in names, languages, and spellings. This can help minimize false negatives and positives by intelligently matching entities across diverse datasets.
• Machine learning capabilities: Incorporation of machine learning algorithms can enhance accuracy and streamline the screening process. These algorithms learn from historical data, enabling the software to prioritize and categorize information based on relevance to specific alerts – reducing manual efforts and minimizing human errors to ensure consistent and effective screening.
• Scalability and integration: Choose a sanctions screening solution that can scale with growing transaction volumes and integrate with existing tools. Scalability is essential to handle increased workloads efficiently, while integration capabilities ensure a smooth workflow with other compliance systems, case management tools, and customer relationship management (CRM) platforms. 

The best sanctions screening software companies

1. ComplyAdvantage

The G2 GridⓇ for Anti-Money Laundering helps measure financial crime risk management vendors based on customer appraisals. The G2 GridⓇ lists ComplyAdvantage as a leader in anti-money laundering.

Sanctions and Watchlists Screening from ComplyAdvantage combines rapid updates to global sanctions data with manual data quality checks by domain experts to help businesses accurately screen against sanction lists, watchlists, and PEP jurisdictions. Its five primary benefits are:

• Market-leading data – Independent reviews of our PEP coverage have consistently found our product offers coverage ahead of the competition.
• Higher alert quality – Manage alerts more effectively with our industry-leading search algorithms.
• Configurable parameters – Flexibly set risk-based alert frequencies and differentiate risk screening levels once a customer is onboarded. 
• Autonomous systems – Check all the sources that matter to you regularly, with updates every few hours.
• Shorter remediation times – Match your workflow by integrating data feeds, case management systems, and CRMs.

Top ComplyAdvantage features:

Sanctions and Watchlist Screening from ComplyAdvantage is used by many industries ranging from those offering financial services to those relying on counterparties and those enabling payments. 

The solution’s top features include:

• Case management – Provides all case context on a single screen, plus bulk decisions on onboarding/monitoring cases.
• Risk scoring – Advanced, automated risk scoring based on your risk policies. 
• Insights – Into team workload/performance, noise-generating sources, customer risk, rule performance & performance on SLAs.
• Search and monitor – Individuals, companies, organizations, vessels, or aircraft.
• Audit logs – Comprehensive audit logging keeps firms prepared for regulator scrutiny at any time.
• Account configuration – Unmatched configurability at multiple levels and fuzziness setting for each source.
• User management – Easily set and edit role-based access for users.
• And more – Self-serve data exports, whitelisting, and a lot more.

ComplyAdvantage’s Watchlists and Sanctions Screening customers include ABInBev, AJBell, Zoopla, and Plaid. 

2. Quantifind

Crunchbase says Quantifind provides “AI solutions for anti-money laundering and fraud detection.” It was founded in 2008 by two atom physicists and has offices in Silicon Valley, New York, and Washington, D.C.

3. Quantexa

Crunchbase describes Quantexa as a “decision intelligence platform for the banking, insurance, and government sectors.” Quantexa was founded in 2016 and has offices in Europe, the Middle East, and Africa.

4. Dow Jones Risk and Compliance

According to G2, Dow Jones Risk and Compliance is “a global provider of third-party risk management and regulatory compliance solutions.” It’s part of the wider Dow Jones group based in New York.

5. Moody’s Analytics

Crunchbase describes Moody’s Analytics as providing “financial intelligence and analytical tools.” Moody’s launched in 2008 and has offices in the Greater New York Area, East Coast, and Northeastern US.

6. LexisNexis Risk Solutions

According to Crunchbase, LexisNexis Risk Solutions “provides information to assist customers in industry and government in assessing, predicting, and managing risk.”

7. LSEG Data & Analytics (Previously Refinitiv)

According to Crunchbase, the London Stock Exchange Group (LSEG) is a “provider of financial markets data and infrastructure.” With headquarters in Europe, the Middle East, and Africa, LSEG was founded in 2007.

How to measure success

While each organization’s sanctions screening roadmap will vary based on risk appetite and objectives, measuring effectiveness involves evaluating the alignment with best practices and choosing suitable software. Key benchmarks include:

• False positive rate: A lower false positive rate can indicate that the system is successfully distinguishing between legitimate transactions and potential matches to sanctioned entities, reducing the need for manual reviews and enhancing operational efficiency.
• Response time to changes: A successful screening program should promptly detect and incorporate updates, minimizing the risk of delayed processing and ensuring compliance.
• Onboarding time: Measure success by looking for improvements in the customer onboarding process. Some solutions have demonstrated up to an 83 percent reduction in onboarding time, achieved through the streamlined optimization of the onboarding procedures.
• Remediation time: When an alert is flagged, how quickly it can be resolved is key to improving the efficiency and efficacy of compliance analysts. This should include an intuitive way to document the decision that was taken for audit purposes. 

Next steps: Explore Sanctions & Watchlists Screening from ComplyAdvantage

Discover why businesses worldwide choose ComplyAdvantage for sanctions and watchlist screening, and book a demo to see the solution for yourself. 

All information is sourced from publicly available websites and is correct as of March 2024. If you’d like to request a correction, please e-mail content@complyadvantage.com and we’d be happy to review this with you. 

The post The best sanctions screening software and companies in 2024 appeared first on ComplyAdvantage.

“What stands out about these entities is that their role in financing and facilitating criminal activity was well known, even before they were subject to sanctions,” commented Deputy Secretary of the Treasury Wally Adeyemo shortly after the exchange’s designation. “In too many cases, some investors and firms in the crypto ecosystem are willing to look the other way when jurisdictions like Russia offer a haven to criminals abusing digital assets.”

Garantex moves billions

According to the report’s sources, Garantex’s activity has spiked as the Treasury has restricted money flows in most of the Russian banking sector. According to two blockchain analysis firms, the crypto exchange may have moved between $7 and $30 billion since the February Russian invasion of Ukraine. 

In chat messages, a Garantex administrator assured clients that the OFAC sanctions would be “good advertising.” The firm’s communications director, Evgenia Burova, denied the company facilitated money laundering, saying the company’s growth paralleled the wider growth of the crypto market in Russia over the last year.

Treasury sources cited by the journal said Garantex is currently under close review. They also said steps are being taken to curtail its activity and that individuals involved in its cross-border transactions may be sanctioned in the future.

Are sanctions evaders using crypto?

During a Senate Banking Committee hearing last year, the president of the Blockchain Association of Ukraine argued that large-scale crypto-enabled sanctions evasion was effectively impossible. Others at the meeting echoed his skepticism.

Yet sanctions-related transaction volumes climbed 152,844% from 2021 to 2022, according to a 2023 Chainalysis report. Forty-three percent of the $20.6 billion in illicit transactions in the period researched were connected to sanctioned entities.

According to the report, transactions by Garantex represented most of the sanctions-related activity observed in 2022. But it isn’t the only platform that’s hit headlines or gained regulator scrutiny.

In November 2022, Reuters reported information from Chainalysis showing an Iranian entity known for supporting sanctions evasion had moved nearly $8 billion through another leading crypto platform. In August 2023, reports indicated sanctioned Russian entities were using the same platform to move money, despite its claims to the contrary.

Also in August, US authorities arrested Tornado Cash’s co-founders on charges including sanctions evasion. 

AML compliance for crypto firms

Sanctions in response to conflicts like Russia’s war on Ukraine have further shifted pressure onto decentralized finance and crypto platforms, which have become more appealing to illicit actors as they seek less transparent ways to move money. 

These risks make it crucial for crypto firms to detect and prevent this activity rather than risking liability for sanctions violations. 

This includes: 

• Ensuring access to up-to-date sanctions and PEP data for screening and monitoring tools. 
• Thoroughly screening new customers against sanctions lists as part of their customer onboarding due diligence.
• Regularly re-screening existing customers. 
• Monitoring IP addresses to identify transactions involving high-risk jurisdictions. 
• Identifying red flags, such as rapid transactions involving multiple wallet addresses, anonymity-enhanced cryptocurrencies such as Monero, DASH, or ZCash, or a cryptocurrency mixing service.

For a broader view on detecting illicit finance risks, firms can consult the Financial Action Task Force’s (FATF) report on money laundering and terrorist financing red flags in crypto.

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