Sanctions Screening Crucial for Financial Institutions in Cyprus
In today’s increasingly complex regulatory landscape, financial institutions and regulated sectors in Cyprus must implement robust sanctions screening processes as part of their comprehensive Know Your Customer (KYC) programs to prevent money laundering and terrorism financing.
The Importance of Sanctions Screening
With the ever-expanding sanctions lists and sophisticated methods used by criminals to evade detection, it is essential for businesses operating in Cyprus to have a solid understanding of the sanctions regulations and compliance requirements. Sanctions are restrictions imposed upon entities deemed malicious or detrimental, such as members of terrorist groups and warmongers.
Effective Sanctions Screening in AML
To minimize risks associated with crime, fraud, and non-compliance with Anti-Money Laundering (AML) regulations, establishing a multi-layered sanctions screening process is vital. This involves integrating various elements and expertise across the organization. To perform effective sanctions screening, organizations must:
- Designate an AML compliance officer responsible for maintaining the screening process, training staff, and reporting incidents to authorities.
- Utilize AML software that conducts list checks, assesses risks, monitors transactions, and generates reports or audits.
- Stay updated with the latest AML regulatory changes and adjust compliance measures accordingly.
- Define risk appetite clearly and manage tolerance for risk to inform screening procedures and monitoring intensity.
- Maintain accurate and organized data to support enriched customer profiles and reduce errors in risk assessments.
- Regularly train all relevant staff on recognizing and reporting suspicious activities.
- Ensure teams are proficient with risk management software and can adjust monitoring rules as needed.
- Establish clear protocols for manual reviews and documentation when matches against sanctions lists are found, ensuring transparent reporting to the compliance officer.
SEON Facilitates Sanctions Screening Process
SEON’s fraud detection platform is a valuable tool for compliance teams seeking to ensure their sanctions screening processes are AML compliant. SEON addresses these needs by providing a constantly updated portfolio of sanctions lists and other watchlists, automatically flagging potential hits for manual review.
The company’s real-time digital footprinting and device intelligence provide a deep profile of those possible hits, assisting reviewing team members in identifying the user as a match or not.
Frequently Asked Questions
What are sanctions in AML?
Sanctions within anti-money laundering mandates are restrictions imposed upon entities deemed malicious or detrimental, aiming to prevent furthering their agenda through business.
Who should be screened for sanctions?
All new users and existing high-risk users should be screened against all relevant sanctions lists during the onboarding process. Transactions involving sanctioned entities or suspicious behavior associated with corruption should also be monitored.
Who needs to do sanctions screening?
Regulated verticals typically include financial institutions, building societies, money services, gambling institutions, and in some cases, high-end retail like art dealers and real estate services. Depending on the jurisdiction, certain businesses may need to implement sanctions screening as part of KYC.
Conclusion
Sanctions screening is a critical component of AML compliance for financial institutions operating in Cyprus. By implementing robust sanctions screening processes, organizations can significantly reduce the risk of non-compliance and enhance overall operational compliance.