• Barley Laing, UK Managing Director at Melissa


• 11.07.2022 04:30 pm
#screening

With the war in Ukraine and corresponding proliferation in sanctions, ensuring effective watchlist/sanctions screening has never been more important for those in financial services.

While financial institutions in the UK have been carrying out sanctions checks for many years, because they are legally required to do so as part of their wider know your customer (KYC) and anti-money laundering (AML) efforts, the plethora of recent global sanctions from around the world makes it even more important they are undertaking effective sanctions screening. Not keeping up with the proliferation in sanctions data could not only see them prosecuted, but tarnish the reputation of their brand in the long term.

Those in financial services need to:

• Source a list containing multiple global sources of sanctions data

Obtain a sanctions list which contains multiple watchlists/sanctions data from around the world. Not just a handful from a few western countries, but a wide range of trusted sources worldwide from governments, public bodies, regulators and credit agencies. Such a breadth of sanctions data will provide compliance and peace of mind. Also, ensure the list selected continually scans for updates and delivers them in real-time. Such a list will aid customer onboarding and improve the user experience.

• Undertake PEP screening

It’s not enough to only have access to comprehensive sanctions data. Those in financial services need to obtain politically exposed persons (PEP) data from around the world. In the UK, financial organisations have a legal requirement to undertake enhanced checks of both domestic and foreign PEPs. The data must include details of relatives and close associates (RCAs) of PEPs, because there can be a tendency for these groups to be involved in or drawn into crime.

• Adverse media checks

For best practice, it’s very important for financial institutions to monitor the latest news in real-time, not only for those facing sanctions, but also PEPs and anyone else who could have potential negative regulatory, financial, or reputational consequences to their organisation. Tools that undertake adverse media checks scan the global news media, sourcing information on those with new sanctions against them, and where legal cases are pending. This helps compliance teams remain up to date on any new information regarding the status of their customers.

• Sanctions training for compliance staff

Is suitable training and guidance being provided for compliance staff who are on the front line when it comes to acting on the sanctions data? As well to having a clear understanding of the latest sanctions measures, they must know how to handle those individuals that are impacted by the sanctions.

• Systems and controls

Are your organisation’s onboarding and payment screening platforms able to effectively act on those who have been sanctioned? And once these individuals have been detected in your database, do you have the systems in place to block transactions and quickly freeze funds? Identifying those who have been sanctioned is only half the battle. The next stage requires having processes in place to immediately act on this information.

• Undertake a broader approach with automated identity verification

An automated tool that in real-time creates a list of those on disparate sanctions lists, including PEPs and RCAs, works well as part of a more comprehensive approach to automated KYC and AML operations. This includes using electronic identity verification (eIDV) that can cross-check user-provided details against reputable data streams to ensure they are who they say they are in real-time. Additionally, when onboarding, implementing document scanning with optical character recognition (OCR) and machine-readable zone (MRZ) technology enables those in financial services to instantly and accurately determine the authenticity of the ID documents provided online. Because these operations are seamlessly integrated into the onboarding process, the user journey remains smooth and friction-free.