How much of an application is selected for AML sanctions screening? Any financial institution selecting the sanctions screening for the AML program must take into account a number of variables.
“Selection of a solution is important to address the regulatory obligation and operational consideration,” said Mary Smith, Director of AML. 85% of people said that they saw a high level of regulatory attention by 2023.
Let’s discuss the factors while you choose the right sanctions for the AML solution.
Regulations compliance importance
Your institution’s compliance with all regulatory standards must be elucidated by AML solutions.
When choosing the provider of the tool to use in screening, the company ensures they check whether the tool screens for all required sanction lists.
Checking the sanctions is part of a bank’s broader AML compliance strategy. Regulators see this.
Your institution will not attract fines, which emanate from a failure to adhere to compliance if it invests in a solution that has proper sanction screening capability.
Bonus: Download our free checklist template here to start evaluating providers.
Risk-based approach foundations
The sanction screening process should be carried out based on a risk-based approach. It is, hence, essential to introduce certain deviations from the initiate sanctions checklist to address the peculiarities of a definite transaction.
The solution you settle for needs to have the capacity to integrate your institution’s risk factors to narrow down the sanctions screening.
A survey conducted also shows that there has been a shift to a more customer-specific risk-based screening in the past two years, with a total of 68% of the financial institutions involved.
This goes a long way toward building an understanding of a risk-based, real-time sanctions screening program.
Make sure to search for AML solutions that divide the user’s information and can filter the sanctions check depending on the levels of risk.
Sanctions lists regular updates
For any organization that is operating internationally to have proper lists of sanctions, these lists must be updated.
The regulators are always adding new names. So, the solution that you will choose should accommodate updates.
Keeping a tool with the most up-to-date data allowed minimizing the number of false positives. It helps gain a more complete screening of sanctions.
Make sure the AML provider sends automatic push notifications in addition to the OFAC and any other lists, as appropriate.
Also, make sure your sanctions checklist has credentials of analyzing the update frequency and methodology.
False positives minimization
No sanctions screening solution is without its flaws, and false positive results are a given. You need one that works to minimize this quantity as far as possible.
There can be so many false alarms that investigators end up spending much of their time going through them all. False positives can be very detrimental.
Always ask your provider about your false positive rate and the methods they use to remove these matches. Some possible features are thresholds that focus on matches of a higher rather than a lower degree.
It is important for global sanctions screening to be as efficient as possible where alerting is concerned, and this means eliminating as many unnecessary ones as possible.
Regulator expectations adherence
Regulators take the view that institutions should be able to screen for sanctions and operate in line with their directives.
Any AML solution that your institution settles for must be able to adapt to changes of the regulator’s expectations. Make sure the vendor is involved in any of the regulatory feedback groups.
Compliance risks are eliminated by selecting a partner who has assisted many clients in passing audits compared to a partner who only fulfills minimum requirements.
IT infrastructure capabilities
When choosing a sanctions list screening tool, pay attention to whether the solution fits into your IT environment.
Some products may need investment in new hardware or be dependent on it, which compromises its speed.
The compatibility with various systems makes it easier to adopt the needed sanctions compliance tasks. Integration with things such as payments is made easy to avoid interferences.
Costs versus benefits balancing
One must recognize the cost input while considering the purchase of any sanctions compliance software.
The value of a long-term partner has to be measured using the benefits that this partner brings.
Much emphasis is placed on the initial costs, but keep in mind the long-term cost of owning the dryer over the years to be served.
If you want more information on how these priorities are addressed in our solution, book a personal demo that will be focused on your institution’s needs.
