A sanctions screening solution plays a direct role in preventing malicious entities from gaining access to financial organizations. This type of software matches current and prospective customers against the list of sanctioned entities maintained by regulatory bodies and other financial organizations. By making use of such a program organizations belonging to the banking, financial services, and insurance (BFSI) industry can identify and decline applications from people and groups that are linked to criminal activities, thus controlling the level of risk they assume.
While the role of a sanctions screening software may sound simple, a one-size-fits-all approach might not exactly be the best when it comes to this solution. It’s imperative for BFSI companies to find a software that suits their particular needs, as this will be key to mitigating the risks they are taking and to optimizing their compliance efficiency. With the right sanctions screening software at their disposal, financial institutions can do the following and protect themselves from attacks and efforts instigated by criminal entities:
Use a Global Range of References for Detecting Sanctioned Entities
Criminals that engage in large-scal activities involving money laundering, fraud, and terrorist financing, to name a few, are not exactly limited by geographic factors. A money-laundering group that mainly operates in Europe, for example, may use their connections to clean their dirty money in different regions in Asia. Due to the scale and threat of financial criminal activities, BFSI companies must be able to use global yet centralized sanctions lists to ensure that they’re not letting blacklisted personas use their products and services.
The right screening program should help in this endeavor by providing financial institutions access to international sanctions lists. This way, financial organizations can easily detect the local entities that are likely to use their facilities as well as international criminals that might think that their illegal activities are relatively unknown to BFSI companies in the region. This will prevent financial organizations from being taken advantage of by criminals of all shapes, sizes, and locations.
Prioritize Prospective Customers That Require Deeper Investigations
Sanctions screening is an essential part of the Know Your Customer (KYC) and Customer Due Diligence (CDD) process. This means that people and groups that want to use a BFSI company’s products and services must first be screened for sanctions before their applications can be approved. When performing CDD and KYC processes, though, companies need to be able to balance a thorough screening with a reasonable waiting time. Otherwise, they might lose their customers in the name of mitigating risks or, on the other hand, unknowingly cater to illegal entities in an effort to process as many applications as they can.
This is not an issue with modern sanctions screening programs, as these tools are typically able to easily determine prospective and current customers that present a greater level of risk to financial organizations. Such solutions can do exact and fuzzy matching, which means that they have a higher chance of detecting sanctioned entities that use aliases, make alternative spellings of their personal details, or even omit identifying information in their applications in an effort to obfuscate their identities. If a customer exceeds a certain threshold for risk, smart sanctions screening software can do more thorough research on the subject while letting less risky clients proceed with their application and onboarding process.
Keep a Close Eye on Existing Customers and Their Transactions
There are times when financial criminals can change their details, but not the way they operate. By pretending to pose less of a risk, these entities can access financial products and services and use BFSI companies to achieve their desired end. However, it’s still possible to catch criminal entities even after they are able to breach a system. This can be done by tracking their transactions and comparing their activities with the known modus operandi of previous offenders.
Sanctions screening programs have the capability not just to gather information on a blacklisted persona but also to use the said entity’s activities to determine if their account is being used to carry out criminal deeds. These solutions can be programmed to incorporate match rules provided by sanctioning bodies, and this information can be used to immediately detect the presence and scope of activities that financial criminals are trying to undertake using the facilities of legitimate financial organizations. This, in turn, makes it easier for BFSI companies to prevent the occurrence of criminal activities in their systems while also allowing them to better coordinate with regulatory bodies in an effort to combat financial crime.
Final Words
Much like legitimate BFSI companies, financial criminals are also maximizing the technologies presented by the digital age. To carry out their illegal activities, many of these individuals and organizations are quick to keep up with the technologies that companies in the financial industry also use. By familiarizing themselves with the said tools, these bad actors can come up with ways to override the security measures instated by the companies they are targeting.
This means that BFSI organizations that rely on dated security and anti-money laundering (AML) program components are at a higher risk of being infiltrated by financial criminals, as they will seem to be much easier targets compared to organizations that subscribe to the latest financial security measures and technologies. By arming themselves with the latest sanctions screening program, though, BFSI companies have a better chance of preventing criminals from ever gaining access to their facilities.
