Checklist for Global AML Watchlists: Are Your Systems Proficient?

Ten capabilities to look for when considering an Anti-Money Laundering (AML) sanctions lists (Watchlist) Provider

Is your financial institution (FI) set when it comes to operating a successful AML watchlist? Is your watchlist screening efficient, comprehensive, cost-effective and reliable? According to the Financial Crime Survey 2016 done by Operational Risk magazine and BAE systems there is an “increasing development and focus of sanctions regimes introduced by governments around the world to target organized crime and stem the funding of terrorism.”

To keep pace with the regulations, FIs know that they need to put in place systems that reduce the risk from fraud or non-compliance, while not being a burden on operations or onboarding. The survey indicates more than half of financial institutions (52%) are boosting their budgets for AML compliance in 2016.

The survey revealed a growing number of firms are using third-party vendors for their politically exposed persons (PEP) compliance screening, from 44 percent compared to 31 percent in 2013. Third-party vendors remain the most popular option for AML, the survey concluded, perhaps because the immense complexity of guarding against money laundering; “The expansion has resulted in a more complex set of actions and obligations and, for this reason, financial institutions are turning to third-party vendors.”

Ten Things to look for in an AML Watchlist Provider:

1) Comprehensive watchlist data from numerous sources
In today’s interconnected financial world, money launderers and terrorists can operate almost anywhere. Therefore, an exhaustive screening program needs to gather data from diverse government sources, international regulators and law enforcement agencies.

2) Individual identity verification
Before screening a name through a watchlist, you want to know that they are a real person. Running an ID verification helps confirm the data the person provides matches records for that person.

3) Monitoring media for adverse mentions
News stories are often ahead of governments in spotting problems. An impressive AML watchlist option is to include coverage for names that have recent adverse media mentions.

4) Frequent updates
Individuals and entities are added, and removed, from watchlists all the time. An effective screening program needs to keep up-to-date.

5) Effective integration capabilities
FIs already have put a lot of money and effort into developing existing systems. Integrating a 3rd party watchlist should be reasonably seamless, quick and friction-free, not a major undertaking. Look for integration capabilities, such as APIs, to speed and simplify the process.

6) System scale and speed
The number of financial accounts, volume of transactions and amount of data checks continues to increase. To deliver on the promise of quick and accurate watchlist screening, a provider needs to have the technology and systems to process data quickly and scale without issues.

7) Workflow automation
A comprehensive AML watchlist enables efficiencies by streamlining the workflow for list screening, processing results, and record keeping. Consider how a program will affect processing time, staff hours and training resources.

8) Adaptable matching algorithm settings (fuzzy logic)
Not all watchlist screen requirements are the same. Different jurisdictions, different customers, and different levels of risk will all affect the match criteria. Therefore, an impressive watchlist provider will offer the ability to easily fine-tune the matching algorithm to best suit the situational requirements.

9) Re-screening capabilities
The need for watchlist screening is not a one-time event, but rather requires ongoing monitoring. Look for a provider that offers simple, straight-forward re-screening capabilities.

10) Risk-based approach
Risk is a relative term. It is up to each FI to determine their exposures to money laundering and terrorist financing risk. An appropriate AML watchlist screening program will allow the allocating of resources relative to the assessed risk, enabling better use of resources and focusing efforts on higher risk situations.

How does Trulioo perform in this AML watchlist provider checklist? With our recently announced Enhanced Global AML Watchlist Capabilities, we’re pleased to deliver solutions that decrease the complexity and costs of AML compliance:

• Real-time global coverage in 190 countries, 6 languages,
• Increased coverage from 126+ sanctions, watchlists, PEPs and adverse media,
• Seamless integration during customer onboarding via API or web portal,
• Over 5 million media articles analyzed for criminal activities and updated hourly,
• Filtering capabilities include country and year of birth.