To safeguard its financial standing and cultivate a reliable clientele, every company must have a comprehensive AML compliance procedure, which includes watchlist screening. Watchlist screening is especially helpful in the financial industry since financial institutions often cross paths with scammers or fraudsters. Keep reading to understand everything about Watchlist screening.
Watchlists are electronic records that compile information and profile individuals from high-risk countries, politically exposed persons (PEPs), individuals in adverse media, money laundering criminals, and cyber criminals.
Governments and international agencies collaborate to make global watchlists. This way, when businesses and groups want to do business with high-risk people, they can check these retribution records to see if they’re listed on them.
People and companies on the blacklist are generally considered high-risk because they are involved in illegal activities or have links to terrorist groups, money laundering, or other illegal activities.
This lets companies figure out the amount of danger and what kind of services the client will get or not get.
Financial Institutions employ AML screening solutions to fetch accurate data stored on various sources, some of which are:
If your business has to follow AML rules, screening against crime lists is a legal requirement. If the proper checks aren’t done during the hiring process, the following could happen:
One of the most challenging parts of watchlist monitoring is figuring out how to do it right without making the hiring process too complex. You want as few false negatives as possible because they mean you’re not following the rules. On the other hand, you don’t want too many false positives because they can slow down the customer path and your process. After all, each one needs to be checked by a person.
Some companies sell memberships to their watchlists or include access to them with their AML tools, but states and law enforcement agencies usually make their records public. Some things that are on crime and punishment watchlists are:
Checking if someone’s name is on an AML watchlist can be done in several ways, from basic searches to more advanced tools that sometimes have more features.
One of the ways is to look for it on your own. Since so many watchlists are open to the public, all you have to do is read the list. Even though you could build an internal script or tool to do this, it’s not scalable because you must go through dozens or hundreds of crime and punishment lists.
This is where tools for AML will be helpful. Your AML solution can find possible matches in many databases by typing the name into a search box.
Note, though, that you should think about the following when choosing a watchlist screening tool:
If you’re simply looking at enormous datasets in the incorrect place, it’s simple to make a mistake here. If you conduct business in Asia-Pacific, working with a global AML provider whose databases are limited to the US and the UK may be problematic.
A key challenge with name searches is to find spelling variations, different alphabets (Chinese or Arabic characters, for instance), and even nicknames.
To limit the number of false negatives caused by typos in spelling, most AML systems will use fuzzy matching. Also helpful is a feature that provides a score indicating the degree to which the system is specific that a particular result is correct. Because of this, you can automate the following AML processes and know who needs human review.
Depending on the vendor, AML watchlist screening may be performed with PEP, KYC, or fraud checks, which can reduce data silos and save money on operating expenses.
With the help of the fraud management system KYC Hub, you may quickly discover as much as you can about your consumers. By doing this, scammers are weeded out, and loyal clients are rewarded with the finest possible service. The KYC Hub’s AML screening module and extra AML features are a part of our products.
The AML API can be combined with one or more other modules to optimize workflows. You can check customers against crime lists, sanctions screening lists, high-risk names, and PEP lists, all available in multiple character sets and with fuzzy matching. Using the same dashboard for fraud prevention, customer profiling, and AML, KYC Hub enables businesses to streamline risk management and compliance operations while maintaining efficiency and security.
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