Pain Points of Transactions Screening Filters
Ensuring Compliance is difficult
Intense regulatory scrutiny in response to terror funding and other sanctioned transactions has created immense challenges for banks. 20% of financial services have experienced enforcement actions by a regulator, and that number is likely to grow.[ii] Banks face massive fines, operational shutdowns and reputational risk, if they don’t check against regulations and ensure all informational gaps are filled before a transaction occurs. And banks are not the only ones that suffer if they do not comply – their customers are experiencing an impact from the compliance crackdown as well. A bank in Asia was ordered by regulators to completely cease operations due serious regulatory breaches and poor management oversight of bank operations.[iii] Customers expect compliance as a pre-requisite and sign of good governance to ensure that banks they are doing business with are not mixed up in criminal activities.
Maintaining a balance in rapid screening
Preventing funds from reaching sanctioned politically exposed persons (PEPs) and terrorists is difficult and comes at high operational cost for staff and IT, especially when it must be done without disrupting legitimate transactions. Inefficient screenings with high false positive rates can cripple customer relationships – holding up a large company’s payroll just once due to a false positive with an employee’s name could cause a bank to lose important business. Overly-cautious screen systems can actually flag customers who have the same name as someone on the watch list which might result in loss of customers if these names are treated as fraud.[iv]
Updating Screening Watchlists