Configuring Sanctions Screening Software: Must-Have Features for Compliance
Configuring Sanctions Screening Software: Must-Have Features for Compliance
Regulated entities subscribe to sanctions screening software to automate the screening and ongoing monitoring requirements. However, if the software is not properly configured, it won’t provide the desired outcomes, resulting in non-compliance and fines. Configuring sanctions screening software requires careful consideration of various aspects. Explore the same in our latest infographic.
Designated Non-Financial Businesses and Professions (DNFBPs) and Virtual Assets Service Providers (VASPs) in UAE are bound by the Anti-Money Laundering (AML), Counter Financing of Terrorism (CFT), Counter Proliferation Financing (CPF) laws and regulations, requiring them to conduct sanctions screening. The sanctions screening software must have configuration functionalities such as the following:
Watchlist Customization
A sanctions screening software must have customisability for selecting relevant and applicable lists or watchlists to match with a DNFBP’s or VASP’s individual requirements based on the geographies it operates and most of its customers or suppliers are based out of.
Screening Type Configurability
The option to select whether to screen a single customer or a batch of a large number of customers must be as each DNFBP’s or VASP’s requirements differ from one another.
Further, the screening software must also provide functionality to screen a natural person customer as well as a legal entity customer.
Notification Management
A sanctions screening software must have the function of setting the notification parameters according to the requirement of the DNFBP or VASP using it.
Such functionality must be provided for setting the duration, frequency, recipients, reminder frequency, etc., so that the DNFBPs and VASPs can achieve the most out of their screening software.
Match Type Customization
Match type customisation refers to setting the match percentage or sameness parameters prior to the generation of screening results.
Generally, match-type parameters are classified as close match or exact match, which helps the DNFBPs or VASPs to determine if it wants to cast a wide net for searching a customer name using close match settings or narrow down the search outcomes using exact match settings.
Script Name Acceptability
Due to variations in the name spelling, pronunciation, and writing conventions, the manner in which names are spelt, written and pronounced in different cultures and countries differs largely from one another.
For instance, the names in certain cultures are written in such a manner that differentiating first name, middle name, and last name is complex, therefore sanctions screening software must have the acceptability to enter customer name in the script it is found. This increases the chances of finding relevant matches for sanctions compliance purposes.
The feature of fuzzy matching helps manage script name and phonetic variations while generating screening results.
Customer Relationship Activity/Dormancy Status
The screening software should have a feature where the user, such as DNFBPs or VASPs, can set the customer dormancy and activity status, basis on which further due diligence measures, such as ongoing screening and determining the periodicity of Know Your Customer refresh, can be determined and consistently applied.
Enabling Ongoing Monitoring
Ongoing Monitoring is the essential legal obligation of DNFBPs and VASPs according to UAE regulations. A screening software with a feature to switch on an ongoing monitoring feature in the background that automates the ongoing monitoring across the relevant sanctions list for finding customer names in screening lists is highly preferable.
Case Management
A sanctions screening software must have the functionality to generate cases if it finds matching results. These cases would be then further escalated to the screening analyst for his review and disambiguation.
Integration with Regulatory Reporting Tools
The screening software should be customisable according to the regulatory reporting requirements of the relevant jurisdiction.
For instance, for a DNFBPs or VASPs operating in UAE, the sanctions screening software must be customisable and configurable to be integrated with regulatory reporting software to meet UAE regulatory reporting requirements in terms of reports to be filed such as Fund Freeze Report (FFR) and Partial Name Match Report (PNMR) Reporting on goAML portal.
Case Auto-Approval Threshold Configuration
To reduce the workload that comes as a result of disambiguation of matches or decoding the sanctions screening results, a screening software must have the functionality to set the “auto-approve” parameters for cases or screening results that generate no or nil results, this feature is helpful for improving customer onboarding process.
Conclusion
To conclude, regulated entities need to configure their screening software in a way that would not only help reduce their workload but also comply with legal requirements. If proper attention is not paid to the proper configuration of the software, it can result in screening software providing too many match results or ignoring true positives. The entities must take a risk-based approach (RBA) while fulfilling its sanctions screening requirement, which shall help the business to mitigate terrorism financing and proliferation financing risks effectively.
