The Importance of Know Your Customer (KYC) Information Compilation and Cleaning

Companies must prioritize Know Your Customer (KYC) information compilation and cleaning to avoid false positives and sanctioned entity detection issues during screening.

Key Challenges in KYC Information Management

• Data Sources Distribution: KYC information may be distributed across multiple IT systems, requiring mapping and integration to obtain a holistic view.
• Relevant Attributes Determination: Not all data elements are relevant for screening against specific sanctions risks. Names of individuals/entities with whom the organization has a relationship can be screened against name-based sanctions lists.
• Sanctions Data/Screening Setup: Institutions should determine which lists are relevant for screening, depending on their clients, products offered, and business nature.

Handling Matches During Screening

1. Alert Generation: An alert is generated when a customer or business partner matches with a sanctions list, which is not necessarily an indication of a sanctions risk.
2. Verification and Confirmation: The match needs to be verified, confirmed, or discounted using additional information to determine whether the match is true or a false positive.

General Challenges in Sanctions Screening

• Evasive Behaviors: Politically Exposed Persons (PEPs) may avoid detection by opening shell companies in offshore jurisdictions.
• Multiple Sanctions Lists: More than one sanctions list may be required for screening, posing consolidation and data corruption risks.
• Poor Internal Data Management: Failure to complete, verify, or maintain information about shareholders, beneficial owners, suppliers, or other relationships can lead to issues.

A Reliable Solution for AML and Sanctions Screening

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