Effective Sanctions Screening in Financial Institutions: Challenges and Tips

Maintaining compliance with ever-changing financial and trade sanctions landscapes is a significant challenge for financial institutions. Here are some key takeaways to address these challenges:

Challenges

• Under or Over-Screening: Entities subject to sanctions may slip through the net (false negatives) if not screened robustly, while over-screening can result in high volumes of false positives.
• Equivalence: Relying on a third party for sanctions compliance is no longer acceptable.
• Divergence: Sanctions applied by different bodies may be inconsistent.

Top Tips

Prepare Customer Data Well

Invest time upfront to cleanse and prepare customer data using data enrichment software to append secondary identifiers. Incomplete or inaccurate data will result in false positives, which can become a significant problem when screening millions of customers daily.

Use Proven, Reliable Technology

The sanctions screening software should be capable of handling high volumes and scale for business growth. It should have user-friendly customizable settings, proven functionality, and the ability to automate tasks.

Screen Against High-Quality and Comprehensive Sanctions Data

To ensure you are identifying sanctions from all relevant bodies, the data you screen your customers against must be comprehensive and up-to-date. Ideally, it should be consolidated with other watchlist databases such as politically exposed person lists.