Six steps to effective sanctions screening | Napier AI

Having an efficient sanctions screening process is essential to comply with AML regulations and avoid operational, legal and reputational risks. Early detection of links to sanctioned individuals, entities or jurisdictions not only protects the organisation, but also demonstrates the right diligence towards regulators.

We live in an ever, changing real-time world, where lists change constantly and regulatory pressures are on the rise to address the change. Having an agile, precise and auditable system is key.

In this article, we will explore the main challenges and how to implement a truly effective sanctions process.

‍

Implementing an efficient sanction screening process isn’t an easy path. Many organisations are facing operational and technical challenges, that if they are not tackled correctly, could generate inefficiencies, increase false positives and jeopordise regulatory compliance.

‍

Some of the most common challenges include:

• High volumes of alerts and false positives, putting pressure on compliance teams and delaying decision making.

• Rigid or poorly-adapted protocols which prevent the prioritisation of truly relevant cases.

• Constant updates from sanctions lists that require systems to react in real-time.

• Integration challenges with existing systems like banking cores, payment platforms or CRMs.

• Lack of traceability and explainability in results, which complicates audits and regulatory checks.

• Lack of configurability, by customer type, product or jurisdiction, limiting the effectiveness of screening.

• Over-reliance on the IT team to make adjustments, slowing operational responsiveness.

‍

By following the six steps detailed below, you can significantly reduce errors, false positives and the risks of non-compliance in your sanction screening process.

‍

1. Assess your risk exposure

Before implementing any technology, it is essential to understand your risk profile. Define which jurisdictions, types of customers and counterparties and payment flows you are exposed to. This initial risk assessment will guide the configuration and controls you will need to implement.

2. Select an appropriate technology solution

Choose a sanctions screening solution that suits your organisation’s specific needs. Look for platforms that offer customisable configurations, explainable AI, automatic list updates and real-time capabilities.

3. Integrate the solution into your operating environment

Once you have selected the technology, integrate it with your core banking, payment or customer management systems. Make sure the process is seamless and that the solution works in line with your current flows, avoiding duplication or disruption.

4. Configure rules and filters according to your risk

Use advanced settings such as multi-configuration or contextual scoring to adapt screening according to product, geography or transaction type. This helps reduce false positives without compromising the detection of real risks.

5. Continuously test, validate and adjust

Perform sandbox testing to validate your configurations before applying them in production. Adjust parameters according to the results and maintain a continuous improvement process to adapt to regulatory and operational changes.

6. Train your team and establish review processes

The best system needs a skilled team. Make sure your compliance team is trained in the use of the solution and has clear processes for reviewing alerts, documenting decisions and responding to audits.

‍