Financial sanctions: The pressure is on - Part 2

Sanctions screening are becoming more complex
The sanctions against Russia have introduced one of the largest changes to sanction lists in recent years. Firms who are not performing customer sanction screening at least daily and against up-to-date sanctions lists, run a serious risk of breaking sanctions. In addition, firms that are not screening payments/transactions against sanction lists in real-time, also run a significant risk of non-compliance. Historically, the largest anti-money laundering (AML) fines have been served on banks that have broken sanction rules. In this second edition of a series of articles, the Lysis Group will provide a breakdown of the practical implications of these sanctions on firms, and how we can assist them to achieve full compliance.

The practical implications
Sanctions management is a key requirement for all financial services firms as well as for many other industries which are regulated for AML. However, whilst it is true that sanction lists change frequently, the scale and scope of the current changes is significantly larger than normal. Such an extensive set of changes to sanction lists will most likely generate some genuine new positive sanction hits and firms with wider Russian dealings will feel the pressure. Furthermore, not all countries sanction the same entities/individuals/vessels at the same time which could severely complicate matters for multinational firms. Volume-wise though, it will be the number of false-positives (near matches) that will be most obvious as matching systems flag possible sanction matches that turn out to be incorrect following (typically) human analysis.

Firms that have highly automated screening processes, possibly using artificial intelligence (AI), will be in a better position to manage the spike in work compared to those where these processes are more manual. The spike in work will be transitory since most sanction systems “remember” previous mitigation work and don’t re-flag the same false positive twice.  That said, the work in investigating and mitigating, both genuine positives and false positives, will be very substantial in some firms, depending on their customer-base.

The Lysis Group has the expertise to assist We can make a real difference by providing a managed service platform for initial screening and on-going monitoring requirements or by providing managed teams to execute this work on our customers’ platforms. All our staff are experienced in AML, Know Your Client (KYC) and other financial crime requirements. Using industry leading software partners, Lysis can also screen legal entities and individuals against all global watch lists and sanction lists, either in bulk or individually. Our specialist analysts will review all potential hits and thoroughly document whether there are any true or false hits. Any positive hit will be escalated to the client in an agreed format and timeline, but all discounted and positive hits will go through a rigorous quality assurance review.

To add to clients’ peace of mind, screening can be carried out as often as required, including daily, weekly, or monthly batch screening. All entities and individuals will be screened automatically as soon as an international watch list or sanction list is updated. Nick Kinloch, global head of Lysis Operations concludes by saying, “If your firm is looking for a cost-effective way to manage their screening and monitoring requirements, then look no further.  Our expert teams and optional secure managed service platform reduces operational risk and managerial/resource requirements. This is because the service is managed by AML and financial crime specialists”.

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