Watchlists Screening: Elevating Onboarding for Business Excellence

The absence of one consolidated global watchlist screening to prevent your business from fraudulent and compliance risks accelerates the need for exploring a customizable and efficient watchlist screening solution while not leaving a loophole for potential crime actors to dodge your anti-crime framework. The Financial Action Task Force (FATF) in its latest publication on anti-financial crime measures revealed the exponential rise in cyber-based financial frauds while the Data Breach Investigation Report (DBIR) 2023 claimed that finance driven breaches amount 95% of the evaluated data. With a rise in financial and non-financial crime rates such as money laundering, terrorist funding, human and drug trafficking, and customer frauds, businesses and organizations all across the globe are struggling to meet the never-ending compliance regulations. These financial crimes being interlinked with one globally concerned money laundering act requires the institutions to have fool-proof detection and preventive measures implemented within their anti-money laundering (AML) structures to ensure business and global steadiness.

At the end of this virtual journey with us, you will be equipped with a brief understanding of how a robust screening service coupled with ongoing watchlist screening can be the ultimate solution your business needs to meet the global compliance requirements and thrive in an ever-evolving economic landscape.

Global Screening Regulations A Ground Level Overview

The diversity of the global economic and financial framework, which allows businesses to flourish, also provides several breaching ways for corrupt behaviors to harm the peace and stability of the business climate. With thousands of transactions and business deals happening at this very moment, undoubtedly, it is difficult to identify that one transaction which could cause a downfall for your business in monetary and reputational terms topped with compliance risks. An IT leading company, Microsoft, failing to implement a robust screening process and compliance measures, paid a settlement amount of $3.3 million for evading US export and sanctions compliance against sanctioned entities such Syria, Iran, Cuba, and Russia.

In the light of enabling financial institutions (FIs) and global businesses to mitigate proliferation funding risks and involvement with sanctioned entities by potentially trespassing sanctions screening protocols, the Financial Action Task Force (FATF) in its revised recommendation of 2020, emphasizes the FIs to implement a cohesive mitigation strategy identifying money laundering, politically exposed persons (PEPs), terrorist financing, and targeted sanctions breach risk. The diverse nature of the inter and intra-governmental legal and financial framework of the member countries makes it difficult for institutions to implement a uniform strategy to combat these so-called established offenses or crimes, therefore, a standard mitigation requirement set by FATF demands the institutions and businesses to employ sanctions and a watchlist program.

Elevated Business Excellence Statistical Analysis of AML CFT Measures

The implementation of emerging IT based tools by the FIs to manage financial crime risks and compliance requirements is making a lot of noise. Stated in the Global Risk Management survey 12th edition by Deloitte, the evaluated FIs are currently using cloud computing (46%), machine learning (27%), big data and analytics (35%), and robotic process automation (29%) in their financial risk management program.

According to the MENA Financial Crime Compliance Group (FCCG) survey 2019, more than 71% of surveyed FIs in targeted countries have AML/CFT programs to fight financial crimes and meet AML compliance requirements. Exported from the very survey, below is the visual representation of budget allocation of AML/CFT departments highlighting the imperative balance between human and artificial intelligence for financial crime mitigation.

Onboarding New Client FATF Compliance and Secured Business Deals

The AML/CFT regulatory standards and recommendation 10 and 22 by FATF urges the FIs and DNFBPs (Designated Non-financial Businesses and Professions) to implement a robust customer due diligence prior to onboarding a new client or business partner. The consolidated watchlist monitoring service as a prerequisite for onboarding of standard and special clients enables the FIs and DNFBPs to employ a rigorous PEP screening, sanctions screening, and adverse media screening. A compliance binded watchlist screening system allows institutions and other professions to verify customer information by using a reliable database assessing the customer relationship and their intended business nature. Along with meeting the compliance requirements, such monitoring services facilitates the businesses to,

• Avoid mistakenly getting engaged with sanctioned or illicit individuals
• Reduce onboarding time with enhanced scrutiny and increased business efficiency
• Enhance customer satisfaction and overall business relationship

The real time and ongoing monitoring protocols offered by a watchlist screening service strengthens your business integrity and compliance measures through consistent monitoring of new and existing clients, nature of their business, customer risk profile, and transaction consistency coupled with source of their funds.

Enhanced Scrutiny for Specific Individuals

In addition to the standard due diligence for onboarding new clients, institutions are encouraged to employ a credible screening for individuals who are entrusted with public functions (PEPs) including their close family members and associates such as lawyers, accountants, etc, recommended by FATF. The elevated scrutiny for public figures and potential individuals in sanctioned or gray list permits the businesses to take timely actions in preventing monetary and reputational losses.

The absence of a functional risk management system has caused severe integral and legal consequences to the global businesses, for instance, one of the largest tobacco manufacturing companies, BAT (British American Tobacco Plc) paid a settlement amount of more than $508.61 million for sanctions compliance breach against DPRK (Democratic People’s Republic of Korea). BAT was found involved in providing tobacco manufacturing equipment and other professional services to the sanctioned entity.

The enhanced due diligence and risk based approach while dealing with specific clients or activities, as recommended by FATF, provides a shield for institutions and other professions to fight against illicit financial activities and meet compliance requirements within the global market.

Facets of a Functional Screening Challenges and Solutions

History has witnessed an evolution in the screening measures and tools over the time. The exponential advancements in the field of artificial intelligence and machine learning (AI/ML) has made it easy for prominent businesses to tackle compliance challenges in ever-growing economic hunger. However, the rise in financial crimes and compliance breaches pushes the regulatory authorities and institutions to unite on standard requirements in an effort to beat these established crimes. Empowered with an holistic approach and induced technical efficiency, the global watchlist screening must meet the intricate compliance requirements and features as discussed below.

Reliable Compliance Data

Threats to the financial systems are broad and need to be addressed in a broader aspect, making the compliance data a compulsory component of a functional risk management and watchlist screening system. The intricacy of reference data varies with the nature and scale of your business and so does the risk management of a Pennsylvania’s bank of Bird-in-Hand can not be as sensitive as New York’s JPMorgan Chase & Co. Along with the data to meet other jurisdiction requirements, the screening system with tools to scan PEPs and sanctioned bodies is imperative. An extensive database covering lists from regulatory authorities across the world and regular updates of such lists enables your business to practice a robust ongoing watchlist screening.

Risk Management and Adverse Media Check

Handling of sensitive data from various sources and consolidated lists such as exclusion lists, wanted lists, denied and restricted party lists, and other screening records including disciplinary actions, fraud warnings, and enforcement actions is crucial for the efficient performance of watchlist monitoring tools. In compliance with the FATF regulations, the optimal screening system requires a robust check through adverse media check in a regulated and structured manner because you can not rely on the google search and miss any potential individual, a living threat to your compliance framework. The right screening tool is automated and allows you to manage the risk by assigning risk scores to the customer profiles and elevating the screening efficiency by overcoming linguistic and name challenges for every entry.

Efficient Ongoing Monitoring: A Key to Successful Screening

With an active ongoing monitoring, your future screening tool should be able to keep an eye on the existing client risk profiles and embed the changes occurring in the client status into the risk management protocol. For example, before 6:35 AM, Rishi Sunak (Prime Minister of United Kingdom) was a low risk PEP but the election results after 6:35 AM dedicated him a slot in the high risk PEP level, therefore, altered the required screening measure from simple due diligence to enhanced due diligence and employment of a vigilant PEP screening solution. Similarly, the continuously updating sanctions lists and regulations demands a screening solution which is not only efficient but helps your business not miss any alarm where further screening is required.

AML Watcher Your Premium Screening Solution

Engineered with real time and automated monitoring facets, AML Watcher streamlines your customer relationship through its seamless ongoing watchlist screening service. To meet the global compliance standards and thrive in the business community, it is crucial for your chosen screening tool to be robust and reliable throughout the screening journey. AML Watcher does that for you, from inspection of threat to managing the risk levels and report generation, our AI/ML embedded system leverages the screening protocol with ongoing monitoring. Not limiting to that, strengthen your screening framework with,

• Reduced false positives through biometric AML screening
• Systematic configuration of extensive database of more than 235 countries, 80 languages, and 1300 official regulatory lists
• Automation of regulatory changes happening in the compliance landscape
• Allocation of reliable compliance resources for risk management and scoring while allowing you to perform custom prioritization
• Identification of changes and periodic judgment of risk profiles against all clients
• Reduced transliteration errors and enhanced due diligence

Learn more about how to meet the global compliance variations and enhance the business functionality with our consolidated screening solution, contact us here.