Four Conditions for Sanctions Screening Success
Many people assume sanction list screening to be highly
fruitful for preventing financial crimes. What if I say this is not true at
all? The online debate on sanctions screening, sanctions compliance, and the use of sanctions as a policy
control tool follows a monotonous pattern.
Now this certainly does not mean that sanction list
screening software is not reliable or serves no purpose in combatting financial
crime. Only if certain sanctions fail to make a difference doesn't classify the
entire sanction compliance system as unreliable.
However, the beneficial aspect of sanctions screening
depends on the availability of alternative policies at hand. Secondly, if the
initial measures and conditional parameters for success are not implemented
failure of sanctions screening must not be surprising.
A very recent study by the Targeted Sanctions Consortium on the United
Nations declared quite a low rate of sanctions success, one in every four cases
on average improves on the basis of forging sanctions.
I know what you might be thinking! What makes an automated
sanctions list screening system an efficient measure to combat financial crime?
Having laid out all the information available online and the ambiguity still
revolving around it, this blog will offer clear insights into the goals of
sanctions and features of efficient sanctions screening for improved
Goals of Sanctions: Offering a Unique Perspective
Before jumping onto the bandwagon of developing an efficient
sanctions screening program, it is important to understand the goals of
developing the system in the first place.
Most of the public and private policymakers emerge from the
assumption that sanctions are meant to change or eliminate the particular
behavior of sanctioned individuals or entities. However, it's a total waste of
time and resources when a behavior cannot be this easily coerced.
Sanction can only benefit the organization or policymakers by increasing the challenges to continue the old behavior. This signaling impact of the sanctions is underappreciated as it helps in the articulation and global reinforcement of regulatory laws.
Now it has become evident that the goals of sanctions are
diverse and their implementation is what makes a sanctions screening program
effective or ineffective.
A clear example of it has been conveyed through TSC research
depicting that sanctions aimed to signal sanctioned targets for advanced
challenges were 27% more effective than those aimed at changing overall illicit
Four Conditions for Sanctions Screening Success
The effectiveness of sanctions screening is often hampered
by the accuracy of data and the lack of appropriate internal controls of the
organization. Emerging tension due to the evolving circumstances, sanctioned
list check stand between transparency and information flow across
Here is the decoded 4-step strategy to build an efficient
sanctions screening system to determine complete proficiency.
Updates Sanctions Database is Important for sanctions to meet their prescribed goals.
Sanctions applied to an individual, entity, or organization
are only considered credible when appropriate and official data sources are
used. This means that the lower the quality of the global sanction list being
used to detect sanctioned entities, the higher the probability of false alerts.
Another crucial drawback could be overlooking potential threats lurking beneath
the surface. Thus, AML services offering consolidated real-time information, sanctioned list checks, and autonomous sanctions lists
should be accessed before mounting in the final decision.
Timely detection of high risks and corresponding action requirements are likely to credit your system as efficient.
Detecting risks as soon as they emerge could possibly exist
in two phases. One during onboarding, and another after onboarding - both
require a proactive approach and automated sanctions list screening solution
for managing risks.
Psychological analysis of your system and consumer behavior can help flag potential red flags before they pose a risk.
Analyzing criminal behavior is technical but not when your
system is prepared to handle just anything. This implies that the greater
the risk tolerance set on your screening system, the more inefficient would be
your screening system. Want to know how? The next condition is your
Targeted screening helps optimize cost and resource allocation aimed to sustain efficient screening solution
Sanctions screening is most efficient when it complies with
targeted goals set for your organization. Take for instance emargo screening.
If a country’s main goal is to avoid trade with one or two precise countries,
directing sanctions screening towards them instead of global screening,
countless times in a day would not only make the process efficient but highly
adaptable, smooth, and streamlined as well.
Insight into Sustaining Screening Perfection
In conclusion, if one-time sanctions checklist
screening is not yielding promising results, the core reason might not be the
sanctions lists and watchlists or screening system itself, rather your
expectations of sanctions to alter behavior, pre-defined goals, or risk
threshold of your system may need to be revised to perform better than ever!