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Zoe Allen

Finance professional with extensive experience in Anti-Money Laundering (AML)



Published Date

November 24, 2023


Blog / Empowering Businesses With Watchlist Screening

12 min Read

Empowering Businesses With Watchlist Screening

The protection of tangible and intangible assets of the organization is extremely crucial because these assets are representative of the total net worth of any organization. Such safety measures and spending in security systems ultimately lead to adherence to regulatory compliance. This is yet another area to which organizations ensure to adhere fully because doing this not only saves the companies from financial losses in the form of theft and fines but also elevates customers’ confidence in the company. The ultimate achievement is the streamlined operational efficiency of organizations. This is best illustrated by a study conducted by Enterprise Strategy Group which found that only 73% of organizations are fully mindful of less than 80% of their assets. This obliviousness was aggravated by the fact that it took around 277 days on average, as per the reports by IBM, to detect data breaches or fraud. It is interesting to note that the sources of these financial attacks were majorly malicious actors (48%) and human error (33%). Additionally, phishing and compromised credentials with poor quality are the most significant initial attack vectors. The gravity of the theft of data can be understood by the fact that the cost of breaching the data of an estimated 50 million records has dramatically crossed $300 million​. Hence, To aid in establishing effective security measures for the protection of businesses, AML regulations require maintaining watchlists. The whole idea of conducting ongoing watchlist screening is to match persons and companies to databases that include the identities of terrorists, criminals, and individuals who are on sanctions lists. This process is critical throughout client onboarding and prior to transactions, demonstrating potential dangers and assisting with AML compliance, thus serving to stop the supply of funds to illegal activities such as scams, terrorism, and cyber-attacks, and guaranteeing the security and integrity of critical assets in an elaborate global security environment.

Now let us understand what watchlist screening exactly is before we can learn what its key features are.

Understanding Watchlist Screening

The way watchlist screening for the security of businesses works is impeccable. The role of global watchlist screening is to ensure that businesses stay abreast of any engagement or association with proven fraudsters or perpetrators of crimes and incur heavy financial losses in the form of fines. This further exacerbates the reputation and global image of the organizations which causes long-term harm, not easily reversible. Watchlist screening does a proactive risk assessment for the organizations and identifies the threats in the customers or partners onboarded upfront. This also allows the process of due diligence to go side by side.

Let us understand the underlying important features of the watchlist monitoring service which form the crux of protecting businesses against threats.

Key Features of Watchlist Screening Solutions

Real-Time Monitoring Capabilities

What else could be more important than spontaneously identifying the proven fraudsters against an updated watchlist, especially when all of this is happening in real-time, hence aiding in real-time monitoring? This signifies the key feature of global watchlist screening. It must be noted that real-time monitoring is increasingly being mandated by international and national regulations and standards, such as those set by the Financial Action Task Force (FATF).

Integration with Existing Business Systems

A watchlist screening system can not possibly operate if is not properly integrated with with the existing business systems of the organizations. Hence, an integral part of watchlist screening is how it becomes a seamless fragment of the business process without intervening in the natural workflow.

Customizable Alert

Allowing businesses to decide and customize how and when they want to be informed or alerted about the potential or proven threat is yet another key feature of watchlist screening. This allows the organizations to conduct risk assessments of the clients being onboarded or the partners they are interested in collaborating. This enables businesses to respond promptly and effectively to maintain compliance and security. This is an important aspect because the FATF puts special consideration on the importance of a risk-based approach, where institutions should regularly update their policies and procedures to address evolving risks​​. This approach comprises of multitude of facets examining customer risk, product risk, and jurisdiction risk​​. Hence, making use of sanctions and watch lists, as provided by OFAC and the United Nations, forms a crux in this procedure.

Underlying important features of the watchlist monitoring service that form the crux of protecting businesses against threats.

Another crucial aspect to understand is how the entire watchlist screening system is performed.

How Watchlist Screening Works

To ensure security businesses follow a step-by-step procedure to conduct watchlist screening. Ongoing watchlist screening identifies various types of threats and risks. Such threats and risks majorly pertain to those individuals or entities who have been involved in illegal activities like terrorism, money laundering, and the proliferation of weapons of mass destruction. Furthermore, to enhance coverage of entities, these lists also comprise sanctioned countries, regimes, and individuals that pose a direct security threat or play a significant role in violating international laws. For instance, UCB AG faced a fine of over $1.3 billion for processing transactions for sanctioned entities and countries. This case especially highlights how crucial it is to comply with rules governing watchlist screening.

When selecting a watchlist screening provider, it’s essential to consider several key factors. Let us have a look at those in detail.

Choosing the Right Watchlist Screening Solution

Updated Lists:

In order to make sure that the right global watchlist screening provider is being chosen, a good judgment about the comprehensiveness of the provider’s database should be made. This entails that the lists it cross-checks against contain up-to-date lists from credible and relevant regulatory bodies like OFAC and international lists like the United Nations Consolidated List. Another important aspect of this is the accuracy and frequency of updates to the database. This ensures how effective the providers’ services are.

Advanced Technological Capabilities:

Secondly, it is imperative to gauge the advanced technological capabilities the provider offers, such as the ability to aptly distinguish the variations in names and aliases, and the ability to manage the persistent conundrum of false positives.

Integration Ease:

Last but not least, as mentioned before, how important it is to integrate the provider’s AML tools into the existing systems of the organizations is a really important aspect before considering the right solution. It is because this adds to the cost-effectiveness for the businesses and also aids in any additional features like ongoing monitoring.

When selecting a watchlist screening provider, it is extremely essential to consider several key factors to ensure security. 

Emerging trends and technologies in ongoing watchlist screening are defining the future of business security measures. Read further to understand how.

Future of Watchlist Screening in Business Security

The persistent problem embedded in AML services is the occurrence of false negatives and positives. That is why advanced artificial intelligence and machine learning algorithms are now increasingly being used to make sure this problem is annihilated to its core. This is done by now bringing increased accuracy and reliability of screening processes to ensure that no further resources are being wasted in correcting the resulting errors. Additionally, apart from AI and ML, blockchain technology has also emerged as a promising tool as a new way of decentralizing record-keeping. This further adds to the accuracy of the data. For instance, many sanctions and watchlist programs have adopted blockchain-based, watchlist feeds. The astonishing part about it is that it too is operating in real-time. This rather new system proactively provides updates on sanction alerts. This truly overcomes the previously inevitable problem of the use of the labor force (which is prone to errors) in traditional watchlist screening.

Wrapping up:

For any business, security is the first and foremost priority for which businesses strive and spend huge amounts to protect their databases and assets and to ensure their compliance with the regulatory environment. Multiple studies conducted are representative of the fact that businesses expand so much that they begin lacking full awareness of the total tangible and intangible assets that they possess and whenever a breach occurs, it takes 277 days on average to detect those breaches. This gap for detection is huge which is further increased by the presence of manual errors. This demands advanced and reliable security systems that could efficiently detect malicious activity or individuals who are a threat to the organizations. This is where Watchlist screening comes into play. Against a database that contains lists of proven threats, it provides real-time monitoring. This helps in alleviating the levels of associations with terrorists or perpetrators of any crime. AML Watcher especially provides an effective way of ongoing watchlist screening by allowing easy integration with business systems, risk assessments, and full adherence to AML regulations. The global watchlist screening is now further being enhanced by AL, ML, and blockchain technology through increased accuracy and efficiency.

Contact us today to ensure you are choosing the right global watchlist screening solution to safeguard your businesses against proven threats and criminals.

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