Name Screening in Financial Institutions

Trends, Challenges and Opportunities

Forensic & Litigation Consulting | Financial Services

August 6, 2020


With increasing complexities in global business operations, the threat of Money Laundering (ML) and Terrorist Financing (TF) continues to grow significantly. Risk professionals and regulators across the globe have taken cognisance of these financial crime related risks and adopted various measures to enhance mitigating controls in the more challenging compliance environment.

Sanctions and name screening are key components of any Financial Crime Compliance (FCC) programme, the complexity of which is largely driven by its coverage and applicability. It is important to note that, globally, regulators view name and transaction screening with the highest level of scrutiny — investigating and penalising lapses identified in sanctions-related compliance breaches.

Fundamentally, financial institutions (FIs) are scrutinised with two aspects in consideration:

  • They are not engaging with sanctioned countries/entities/individuals
  • They have an adequate framework and suitable operational mechanism to detect high risk individuals/entities

FIs are, therefore, putting significant efforts in to developing and implementing a robust governance framework within their name screening programs. A key aspect remains to cover elements from a people, process and technology perspective to ensure adherence with compliance requirements. The fundamental challenge faced by FIs is the volume of alerts generated for such screening matches, with a false positive ratio of over 99%. This, along with other typical challenges, contributes significantly to the overall problem statement of effectively managing the screening program.

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