AML Sanctions & PEP Screening

Author: Liran Krispin

Consumer Banking Retail Payments Mortgage Lending Payments Enterprise Risk
Development

Under FATF directives for the AML international regulations, financial institutions need to perform an entire customer base / roster name screening against various sanction and PEP lists every time they are updated (following the OFAC framework). Today it’s common practice to screen the entire customer roster daily, especially as the main sanction lists are updated almost every other day.

Screening the customer roster is not an easy task as there are many false positives that re-appear and a financial institution with 20 million customers must have in place the IT infrastructure, compliance team (officers and managers), and the needed support to handle this daily task and manage the backlog.

In trying to tackle this issue, banks and financial institutions have incorporated “White Listing” methodology, which essentially after a customer was flagged and resolved in a positive manner, the bank will white list that customer so they will not re-appear. However, there have been cases where whitelisted customers in time have actually became sanctioned; usually due to more information surfacing that would enable identifying them as such sanctioned persons.

 

Fincom.co’s - Ongoing Name Screening Solution

Fincom.co uses its advanced technology to ensures that you are 100% AML compliant, by keeping your entire customer roster always clean. Fincom.co’s proven Ongoing Name Screening solution, makes sure “no misses” occur in the screening process, while reducing the false positives operational burden, illuminating expensive systems and significantly lowering, by at least 20%, total costs. This result is achievable by running over 500 verifications a second, enabling a single node to process over 1.8 Million verifications an hour, and to do away with backlog issues while having a low IT footprint.

Fincom.co’s advanced data management processing system can screen against all data or against only new data sources, enabling the following:

  • New customers screened against all databases
  • Entire Customer roster screened against delta of new information
  • Customers that were flagged and new information has appeared either from the customer or data-sources will be automatically rescreened “persistence”

 

Persistence - No need for whitelisting

Fincom.co has developed a mechanism that illuminates the need for “whitelisting”, which is one of the main reasons for market failures on AML on-going screening compliance. Fincom.co’s persistence mechanism is designed to overcome the problems of whitelisting, by taking a snapshot of the customer flagged and resolution. It happens in the following manner:

  • In any case of a flag, the results of the verification will be sent to the compliance team for approval.
  • Once approved, the persistence mechanism will save a snapshot of the approved ticket including all details reflecting current situation
  • “Persistence Mechanism” will “remember” this approval, and the name will only reappear for screening if there is any change in the “snapshot”.