By The banking and Fintech sector continues to grow day by day. We can now perform many financial transactions in seconds, regardless of space and time, which in the past took longer and with more effort. Although these new technologies offer advantages for us, they also create new opportunities for crimes such as money laundering, corruption, terrorist financing, human trafficking and illegal betting.
Financial crime regulators have enacted anti-money laundering (AML) regulations so that players operating in financial markets do not mediate these crimes. AML laws consist of various recommendations and obligations aimed at eliminating potential crime hazards for businesses operating in various sectors, especially financial institutions.
One of the most important AML regulations for financial institutions is the so-called AML Name Screening procedure.
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What is Sanction and PEP Screening?
Name screening is the most basic AML and KYC (Know Your Customer) requirement, also known as sanction and PEP screening. Sanctions and PEP (Politically Exposed Person) Screening is a process by which a financial institution or other organization screens its customers and potential customers against international sanctions lists and lists of persons identified as PEPs.
Sanctions and PEP screening is used by companies to comply with regulations and protect their reputation. The screening process typically involves searching databases and lists, such as those maintained by the US Office of Foreign Assets Control (OFAC) or the European Union. The screening process may also include a review of public records and media reports to identify any additional risks associated with a person or organization. Businesses can find out which countries to base sanctions data on by checking the AML policies of the regulators in which they operate.
Why AML Name Screening is Important?
Of course, no business wants to mediate an illegal crime. This causes businesses to face regulatory penalties and reputational damage. AML regulators want businesses to adopt a risk-based approach to combating financial crime. AML name screening, applied in customer onboarding and customer monitoring processes, enables the identification of customers’ risk levels.
Businesses fulfill their risk assessment obligation by applying AML name screening to their new customers in their customer onboarding processes.
Purpose of AML Name Screening
The purpose of this screening is to identify customers who may pose a higher risk of legal or financial compliance issues, as well as to help prevent money laundering, terrorist financing or other illegal activities. Name screening is also used to detect and deter fraud and other suspicious activities. If a customer’s name matches any of the names on the list, the financial institution may be required to take additional steps in order to comply with AML regulations.
If a customer or employee of the business matches the sanction list data, there are various procedures that the compliance officer (Also known as AML compliance officer, KYC specialist). responsible for enforcing AML policies in the business must follow.
AML Name Screening for Banks and Fintechs
For Banks and Fintechs, AML Name Screening is a mandatory AML and KYC procedure. The screening process helps financial institutions reduce the risk of their involvement in money laundering activities by identifying customers who may engage in such activities. The process also helps banks and fintechs comply with AML regulations and protect their reputations.
Customer satisfaction is critical for banks and financial institutions today. For this reason, it is critical that these organizations do not harm the customer experience while performing their AML procedures. Here, Name Screening Software (Sanction & PEP Screening Software) comes into play.
Sanction & PEP screening solutions provide automatic screening of sanction and PEP data that must be controlled by AML regulators. Banks and financial institutions can automatically check their customers and employees in these sanction lists with only their name, surname or other critical information. In addition, companies producing sanction & PEP screening solutions offer APIs to speed up their control processes. Thus, when the company opens an account for a customer, the API automatically performs the sanction & PEP check process on the backend. If there is a match, the system generates an alarm and informs the relevant people.
In today’s technology world, manual sanction control should never be preferred by businesses. Because enforcement and PEP data are dynamic data. For this reason, manual control processes can cause many errors and waste of time. These mistakes cause businesses to face regulatory penalties. It is therefore recommended that businesses invest in automatic name-screening solutions.
Top 5 AML Name Screening Solutions
Here you can find businesses that offer sanction and PEP screening services that have the global sanction and PEP database:
- Refinitiv World-Check Risk Intelligence
- Trulioo
- Sanction Scanner
- Comply Advantage
- Alessa
- Sumsub
- Down Jones
- Fineksus