The Role of Advanced Technology in Sanctions List Checks

Sanctions List

The financial landscape is interesting to explore. There’s so much that is known to the world and so much more that is yet to be discovered. Not long ago, AML (anti-money laundering) was just a new concept with no idea of how it operates and what dilemmas it eliminates.  The global pandemic of COVID-19 woke us all to the high prevalence of financial crimes and money laundering that happened through the digitalization of every aspect of life. 

It is notable through a case study depicting breaches of sanctions,  OFAC (Office of Foreign Assets and Control) imposed sanctions on Iranian nationals for a consistent supply of weapons to Iran. This is just one of the many cases that depict the amount of challenges organizations experience in navigating through a complex web of sanction regulations. 

Before that, there was no such clear and tremendous discussion about sanctions, sanction lists, or sanction list checks. The major questions arising to date talk about does sanctions even work. If yes, to what extent do they alter the behavior? Is it in control of regulatory bodies to combat money laundering with widespread application of sanctions screening alerts?

This blog will talk about all these long-due concerns with a clear answer for all. You can also expect to know about technological advancements in sanctions screening solutions for 2024. 

What are Sanctions?

Sanctions are the actions taken to combat the exposure of financial fraud and money laundering. The core purpose of sanctions is often misunderstood among people, which is why the efficacy varies among organizations. 

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Despite altering the behavior within a blink, sanctions are coercive actions or policy implementation that make it difficult to continue the course of illicit behavior. This can be done in two ways:

  • Either by increasing the cost of  following the same track 
  • Either increases the complexity of maintaining the same business ties 

In Light of the Emigrant Bank Case 

This Newyork based Emigrant Bank was fined by OFAC for retaining an account belonging to Iranian residents. The bank agreed to pay nearly $32, 000 in response to a settlement with OFAC’s Department of Treasury in charge of sanction screening violations

Now, the cost of non-compliance resulted in such heavy fines that banks would’ve to ultimately stop onboarding residents from a sanctioned country. This change in behavior facilitates minimizing the prevalence of money laundering.

Top 5 Technological Advancements in Sanction List Checks 

In today’s age, numerous tools are claiming to offer the finest AML screening. However, what matters is the scalability, ease of use, and overall compliance of tools with diverse systems. Here is a guide to help you understand how to decide which tool is ideal for sanction list checks. 

Data Coverage of Sanction Screening Tool 

Without data, no screening is credible. Many companies tend to rely on open, online datasets which are never reliable nor current with ongoing data-centric regulations.  Investing in a tool that enables insight into the global view of sanctions on individuals, entities, organizations, vessels, and aircraft helps reach the industry-leading standards of global sanctions list screening. 

Be it a KYC venture, IDV solution, supplier analysis of venture investment, or global data, sourced from official sources can offer unmatched compliance. 

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Custom Screening Solution Is Undeniable 

Any Ant-money laundering solution can offer insights but not every system offers relevant insights. Many organizations fail to comply with screening as their screening system is not aligned with unique business requirements. 

Every business is unique, so must be their screening solutions. Be it real-time analysis, custom risk scoring, fuzzy matching, custom watchlist screening, or ongoing monitoring, a system that is highly flexible or adaptable to unique business requirements is today’s need. 

Easy-to-use Screening Software 

Screening itself isn’t as tedious as the amount of time and training it takes for a compliance officer to become familiar with the usage. An autonomous sanction list screening software with, well-refined search parameters may not only help reduce the challenges associated with technical damages but also improve the efficiency and speed of screening large volumes of data. 

Unique Budget Range for AML Compliance 

Not every AML solution is ideal in terms of efficiency, accuracy, and pricing. Many AML services turn out to be expensive than the prescribed budget thus companies fail to maintain the same standard of screening as expected of them. 

Flexible Integration Across Servers 

Integration is a complex pain point among many companies that are using legacy AML solutions. An ideal sanctions list screening solution must be one that offers the flexibility of using a database and entire suit of AML compliance, addressing to unique needs of every business. 

What are Expected Future Prospects?

Digitalization has taken all of us by surprise. With every step towards increasing reliance on digital means of communication, AML solutions are hit with a benchmark to remain ahead of emerging threats. These tech advancements are just the beginning of safe financial future 

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