Maintaining compliance with sanctions lists can require a lot of manual operations and cognitive overhead for Compliance and Risk Officers. Sanctions monitoring has the potential to generate the highest count of false-positive alerts because the risk of missing a match is severe, and the odds of finding a real match are so low. It is common for smaller companies to perform these checks at scheduled intervals by manually searching for parties via custom SQL queries or complicated Microsoft Excel formulas. The effectiveness and efficiency of high-performing compliance systems and programs can be enhanced with a handful of advancements. This article dives deeper into these methods, demonstrating how they enhance our ability to manage risk, make swift and accurate decisions, and protect companies and customers from potential threats.

Combine Screening and Transaction Monitoring

When an analyst has limited information to decide on a match, they will look for other relevant evidence that helps confirm or deny if their subject is a sanctioned party. Integrating the screening process with transaction monitoring can help you detect risk more accurately and increase efficiency. Combining these functionalities provides analysts with context that can make it easier to make accurate determinations. Understanding connections between parties helps confirm the nature of relationships and the possibility of confirming or denying a sanctions match. Prior notes, analyses, transactions, and interactions with the customer can aid in the decision-making process. When an analyst has information about the subject primarily transacting in New York, while a similarly named sanctioned entity lives in Brazil, they can confidently say that these are probably not the same person. If the subject looks like they are conducting transactions consistent with being a student, while the sanctioned party owns a chemical plant, the analyst has even further cause to suspect that these two individuals are not the same person.

Be Proactive

Risk and compliance teams shouldn’t have to wait for transactions to occur to be alerted about potential sanctions violations. The sanctions screening tool should also perform checks for individuals who update their KYC/B even before they perform a transaction. This method lets your compliance department avoid any sanctions risk before the transaction happens and reduces the chance that a client’s payment is paused for review. A system that is always up to date ensures that risk and compliance teams will no longer have to do post-facto or scheduled screenings. This gives teams confidence that none of their users are slipping through the cracks and transacting with or as a sanctioned individual.

Aim for Speed and Efficiency

Improving the user interface to enable swift comparison of the same data fields between the sanctioned entity and their client would greatly improve accuracy and speed. In a successful sanctions program, analysts should be able to evaluate an alert in under 60 seconds. Dispositioning these alerts is often manual, with analysts having to type out their justification to determine a match. That’s why time is crucial, and a software system needs to manage the effort spent on writing. In situations where analysts compare a handful of the same data fields for each alert to confirm or deny a match, an automated system is necessary to record the reasoning while decreasing the time to make a decision.

Make Use of All Data Fields

Allowing users to adjust their screening on more than just a single name string will alleviate much of the operational burden without missing any true matches. Risk teams should be able to utilize all dimensions of information to automatically make decisions that people previously made. If users want to de-risk events when just the year of the date of birth doesn’t match, or a specific piece of the address does not match, they should be able to. If they want to bound that specific piece of information to include ranges of dates or locations, that should be allowed. Once a customer has been cleared, having the ability to automatically omit them from screening against specific lists until the next version is crucial for efficient resource management. Screening against the deltas in a list helps to lower the count of repetitive alerts significantly.

Test with Real, Readily Available Data

Tuning and testing with real data does a couple of important things; it prevents erroneous flags and allows for faster feedback on the decisions being made. The ability to verify assumptions ensures that the risk team better understands the amount of work they are about to generate for their analysts. And testing with real data without having it generate live alerts is key. However, this presents a logistical challenge as the necessary data sets aren’t always readily available. At larger institutions, just getting test data can take days or weeks. Analysts and officers need to have this data readily available to test and tune it in a matter of minutes.

Embrace Change

New analytical strategies are not here to replace everyone but rather to work hand in hand with analysts, to cut out repetitive work, and allow experts to focus on their craft. Compliance and Risk Officers must stay alert to protect the company from risk. The world of regulation is always changing, and we need to keep learning and adapting. New technology is making our jobs easier and more effective. It’s helping us to manage risk better, with fewer false positives. Let’s make the most of it and keep working hard to protect our companies and customers from risk.