Internationally, regulators view name screening with the most scrutiny. If any illegal activity is identified, the defaulting party’s data is investigated, and they are penalized for the lapses identified in sanctions-related compliance breaches.
The process involves verifying every onboarding customer against several sanction lists and criminal databases issued by global law enforcement agencies. Customer identity is verified through various aspects. Their current and previous record is also checked for any criminal activity.
AML Name Screening is done against Sanctions Lists, Politically Exposed Persons, Adverse Media and Local/Internal Blocklist databases. Besides customers, vendors, employees and third parties are also screened.
There are two purposes; assessing risk and avoiding violation of various sanctions. Once both these aspects are taken care of, businesses can shield themselves from massive regulatory penalties in case of non-compliance.
Know Your Customer and Customer Due Diligence is carried out for risk assessment. Clients whose names are in Sanctions and PEP lists or adverse media data are said to be having high-risk customer profiles. The reason PEPs need to be tracked and reported is they have greater access to financial crime opportunities–corruption & bribery–as compared to others.
PEPs are prominent public figures who carry out a function in which the general public trusts them. However, the definition keeps changing with time and the criteria keeps varying from one country or even company to another. PEPs include:
Lack of AML screening can lead to severe consequences including the defaulter's identity being exposed, revocation of funds, and the business being permanently banned for carrying out operations (depending upon the severity of money laundering conduct).
Fundamentally, financial institutions are scrutinized. Such institutions offer or take financial services of any kind and can even involve third parties. Further, organizations and their subsidiaries that directly or indirectly take services from these financial service providers are also scrutinized.
Two aspects are considered in this scrutiny:
Other significant businesses that are money laundering facilitators include:
The process is undertaken when the customer account is opened. It is important to note that customer risk level can change over time. So, businesses should perform AML name screening periodically. Further, to protect the company's reputation, companies must also carry out name screening for their employees.
AML-TRACE carries out accurate and reliable AML name screening of thousands of clients within minutes. Talk to us to know more.