Financial Crime World

Financial Institutions Must Ensure Effective Sanctions Screening and Transaction Monitoring

In today’s ever-evolving world of anti-money laundering (AML) regulations, financial institutions must stay ahead of the curve by implementing robust sanctions screening and transaction monitoring processes.

Sanctions Screening: Are You Doing Enough?

Sanctions screening is a critical component of an AML program. Financial institutions must ensure they are using the right risk reference data to identify potential sanction matches. This includes:

  • Reviewing narrative sanctions, which can be challenging due to their lack of specificity
  • Using law enforcement and adverse media data to screen records for relevant risk
  • Having a policy in place for handling Politically Exposed Persons (PEPs) and state-owned entities
  • Optimizing screening software to take a risk-based approach, using factors such as:
    • Date of birth information
    • Address information

Transaction Monitoring: Identifying Suspicious Activities

Transaction monitoring is another crucial aspect of an AML program. It involves the analysis of transactional data to identify suspicious activities. According to the Association of Certified Anti-Money Laundering Specialists (ACAMS), financial institutions should be looking for:

  • Daily cash activity in excess of reporting thresholds
  • Aggregating cash activity over a period of time to identify possible structuring

Reporting Suspicious Activities

Financial Intelligence Units (FIUs) require financial institutions to report suspicious activities. It is essential that institutions have a clear understanding of their obligations and have a process in place for tracking investigations of suspicious activity reports.

Independent Testing: Ensuring AML Program Effectiveness

Independent testing is critical to ensuring the effectiveness of an AML program. Financial institutions should ensure their programs are evaluated regularly, with a focus on:

  • Independence
  • Frequency
  • Qualifications
  • Coverage
  • Reporting

Technology: The Key to Effective Compliance

Technology plays a vital role in reducing the burden of compliance and allowing financial institutions to operate more effectively. Alessa, a leading provider of AML compliance solutions, offers software solutions that can help institutions leverage technology to:

  • Reduce manual work
  • Stay ahead of changing regulations

Conclusion

Financial institutions must prioritize sanctions screening and transaction monitoring as part of their AML programs. By asking key questions, implementing robust processes, and leveraging technology, institutions can ensure compliance with AML requirements and protect against money laundering and terrorist financing activities.