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Helping simplify the complex world of sanctions screening

Helping simplify the complex world of sanctions screening

Financial Crime Compliance,
25 July 2018

Effective screening will help you meet regulatory and due diligence obligations

With many correspondent banks opting to terminate relationships in high-risk markets, local banks need to reassure correspondents that they have robust compliance processes in place. So effective screening is more important than ever – but what does this involve in practice?

What do screening activities cover?

Screening provides a powerful defence against illicit financial partners and activities and is essential for transparent and traceable financial crime compliance. Screening can be carried out against:

  • Sanctions lists
  • Sanctions Ownership Research (SOR)
  • Politically Exposed Persons (PEPs)
  • Relatives and Close Associates (RCAs)
  • Adverse media

The objective is to screen data to flag high-risk customers, accounts and transactions. Sanctioned individuals should be prevented from using the financial system, whereas PEPs and RCAs can operate accounts as normal.

Customer screening vs. transaction screening

  • Transaction screening involves the real-time, in-flight detection of names of individuals or entities that are prohibited from using the financial system. The focus is squarely on screening incoming and outgoing messages against sanctions lists to identify potential threats.
  • Customer screening takes longer, since screening the account database involves looking at a broad range of data sources, from sanctions and PEP/RCA lists through to adverse media. The aim is to identify accounts that need freezing/blocking, require more detailed due diligence, or could present problems in the future. 

Demonstrating effectiveness

Carrying out transaction and customer screening is essential, but it’s not the whole story. To keep up with regulatory requirements, you need to be able to assess, monitor and disclose risk – and prove you are doing so effectively.  And you need to be confident you can uncover potential risk without slowing business operations.

Finding and collating the required information can be a manual process, often resulting in inaccurate reporting and inefficient processes. So why not change to an automated process with a centralised audit trail?

If you are a small bank, you need to demonstrate transparency and compliance to your correspondents. The right screening tools, backed up by clearly auditable processes and controls, can go a long way toward providing such clarity and reducing compliance costs for your correspondents – which helps reduce the chance of de-risking.

Find out how SWIFT can help protect your business

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Simplify the complex world of sanctions screening