Compliance is not a burden; it’s a necessity to ensure the integrity and reputation of your business. Failure to comply with the AML regulations can cost businesses millions of dollars in fines and penalties.
Let’s continue with a real-time example.
UniCredit Bank AG had to pay 1.3 billion dollars in fines for not following the screening process and allowing sanctioned people to make financial transactions. Every organization seeks to safeguard its reputation and avoid regulatory fines and penalties by streamlining its AML compliance efforts. And what could be the best way to have an advanced screening solution in your existing AML compliance efforts?
Screening customers, business partners, and clients against global watchlists is essential for financial institutions. It is compulsory for financial institutions to screen against watchlists to follow the AML compliance program and avoid interacting with money launderers, terrorist financiers, and many other high-profile criminals. The following writing will highlight businesses’ advantages by conducting automated, watchlist screening and relating it with the real-time case study.
Understanding the Watchlists and watchlist screening
Watchlists are databases of individuals and businesses that have done something illegal. The watchlist data include OFAC lists, sanctioned lists, PEPs lists, adverse media lists, lists from FATF and World Bank, and so on.
On the other hand, global watchlist screening is a proactive measure that helps businesses identify their customers, employees, business partners, and clients whether they are on the watchlist.
We all know businesses always strive to follow the screening process that helps them mitigate the threat or any sort of harm, and that could be achieved through the automated screening software solution.
Advantages of Watchlist screening for businesses
Watchlist screening could provide businesses and financial institutions with benefits beyond meeting the AML compliance program. Allowing firms to detect fraud, corruption, and money laundering activities will enable organizations to make precise decisions before onboarding new clients and business partners. And when you have a technologically advance solution, it can help you assess the risk level by pertaining from various databases published by various regulatory bodies. Let’s glance at how financial institutions have successfully implemented automated watchlist screening and helped enhance their AML watchlist checks.
Case Study of Successful Watchlist Screening
2012 was very tough for standard chartered banks. The regulatory body imposed a 1.1 billion dollar fine for allowing some sanctioned entities—particularly those belonging to Iranian organizations—to make thousands of successful transactions. This all happened because the bank did not implement the strict watchlist screening process within the banking channels. However, after reputational and economic damage, the bank implemented a strict AML compliance program, including the watchlist screening. It successfully reduced the chances of being exposed to such transactions again.
The best strategy for efficient and reliable watchlist screening
Considering the importance of AML watchlist monitoring and screening and making the screening process more streamlined and straightforward, we have developed the best business strategies and practices.
- Rely on the Updated watchlist database.
The database continues to change as multiple regulatory bodies add, remove, and alter their status to allow businesses to make updated decisions.
Therefore, it is vital for businesses to rely on updated databases, like the one AML watchers provide, to stay compliant with the AML requirement of risk assessment and avoid undesired results.
- Use Automated Watchlist Screening Software.
Make sure you are integrating screening software to automate the screening process. With an automated solution, businesses can easily streamline their compliance and risk assessment process by regularly updating and cross-referencing multiple databases.
- Make sure your watchlist data is updated.
The compliance team has very much to do here. It is their responsibility to regularly check the updates related to the watchlists and update the list if any news is added, removed, or altered by the international regulatory bodies to make the screening process more accurate..
Watchlist screening challenges for Financial Institutions
There is no question about the benefits of a watchlist screening for business, but like any other solution, it also brings some challenges.
It starts with false positive and negative results that often let the criminals go undetected or show the wrong details that cost businesses time, money, and resources.
More accurate data is needed for false results. Another question arises on its scalability. Though some screening software can screen a lot of data simultaneously, there are still challenges for those still relying on the traditional way of customer screening. To avoid any legal issues and screening challenges, businesses first need to implement the advanced AML watchlist screening software within their organization that not only saves time but is also more reliable and comes with almost 0% false positive rate.
There are various screening solutions, but what should you opt for? Well, the one that is cost-effective and reliable at the same time. AML Watcher matches these requirements, and the best part is that you can get 30 free searchers before actually buying their software.
