Watchlists Screening – Secure Your Business Now

Watchlist screening, which is yet another tool used for Anti Money Laundering efforts has greatly enhanced security and alleviated threats of financial crime, especially during the customer onboarding process for businesses. This is well supported by a report published by ACAMS where it was established by the institute that the corporations that had incorporated global watchlist screening (as their efforts in AML compliance) into their systems reported an average 30% reduction in the occurrence of illegal exchange of money and even money laundering. Businesses through watchlist screening services make sure that they are performing customer due diligence and hence preventing themselves from the later stages of doing business with those entities. This is a proactive approach that keeps them safe from proven financial crime perpetrators.

Let us now deeply understand what global watchlist screening actually is before we learn about its key features.

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.

The key features define the effectiveness of ongoing watchlist screening. Let’s have a look at these.

Key Features of Effective Watchlist Screening

An effective system of ongoing watchlist screening helps businesses in the identification of fraud or financial threats right at the start. Hence, to ensure that the screening is error-free and efficient, the database/list should be updated in real-time. This ensures that the monitoring is also taking place in real time and is accurate. Additionally, the integration of updated lists/databases with the existing systems of an organization is extremely crucial too. This ensures accuracy as well as a smooth screening process. Furthermore, a feature that allows the company to assign risk scores to its stakeholders depending upon their assessments adds a layer of an effective watchlist screening system.  Such tools allow businesses to comply well and easily with the AML laws and also evolve with the changing needs in the future.

Understanding the process of ongoing watchlist screening is important so that MLROs can have a better idea of how the tool can be used and integrated into their systems.

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.

Watchlist screening has many benefits when it comes to safeguarding the system and ensuring safe customer onboarding. Let us learn about its advantages.

Benefits of Watchlist Screening for Business Security

Since watchlist screening allows the identification of proven criminals involved in any illicit activity or money laundering, it protects organizations/businesses from being associated with such entities upfront. Hence, this allows protection against hefty fines and penalties. This eventually enables the businesses to comply with AML regulations. Many renowned financial institutions through their compliance with AML laws have been able to alleviate the cases of money laundering and other frauds. The names include JPMorgan Chase and HSBC Bank. 

Furthermore, fintech companies and the retail sector have been able to report a decreased level of unauthorized or illegal transactions, together with a decreased number of suspicious users being onboarded. All of this could be attributed to the adoption of sanctions and watchlist programs which the organizations have integrated as a part of their AML strategies.

Global watchlist screening has proved to be very beneficial. However, it’s still imperative to know how the future of this tools will unfold so that organizations/corporations can stay abreast of the changing technology.

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 bringing increased accuracy and reliability of screening processes to ensure that no further resources are 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.

Concluding Thoughts

For businesses, in an attempt to enhance security and make sure that customer onboarding is free of risk, watchlist screening is handy because of the proactive approach to identifying potential threats to corporations. With its help, the threat from an entity that has been convicted of a crime is eliminated before it becomes a stakeholder for the businesses. ACAMS has been persistently studying the outcomes of adopting global watchlist screening and according to the reports published by it, the organizations that have adopted ongoing watchlist screening and integrated into their systems experienced a significant decrease of 30% in illegal transactions/flow of money. This unreservedly prompts a deeper understanding of the process of watchlist screening through due diligence and assigning risk scores to the entities. For an effective approach, it becomes highly crucial to make the tool operate in real-time using vast and updated lists/data. Watchlist screening is bound to become even more accurate and efficient in the near future with the incorporation of blockchain, AI, and ML. AML Watcher remains at the forefront to partake in that future building and making the process of customer onboarding safe.

Contact us today to ensure a reliable process of global watching screening eliminating threats of financial crimes.