.svg)
Sanctions compliance for name screening is at a crossroads. Financial institutions are under increasing pressure to modernise their financial crime compliance systems, yet many compliance teams find themselves stuck — juggling rising alert volumes, increasing regulatory requirements, and outdated legacy technology. The challenge is no longer just about compliance but about making a compelling business case to stakeholders across operations, risk, technology, and business functions.
Understanding the total cost of ownership (TCO) for sanctions screening is critical to securing investment in next generation screening technologies. It requires a holistic view of costs beyond software licensing, considering operational burdens, risk exposure, technology constraints, and business impact.
What do sanctions compliance mandates look like today?
There has been an estimated 30% year-on-year growth in the number of sanctioned entities, in large part due to global political instability, and with potential complexity arising from trade embargoes and other restrictions that necessitate further screening. Banks are also dealing with increased regulatory pressure for near real-time intelligence data, name screening at a daily or twice-daily delta is no longer good enough.
For example, in the European Union, the number of individuals and entities sanctioned due to Russia’s invasion of Ukraine has increased dramatically, with over 1,800 entities and individuals added to the sanctions list since 2022. Similarly, in the United States, the Office of Foreign Assets Control (OFAC) has significantly expanded its Specially Designated Nationals (SDN) list, targeting entities linked to cyber threats, narcotics trafficking, and geopolitical conflicts, adding over 3,135 designations in 2024 alone—a 25% increase from the 2,502 additions in 2023. Additionally, the new administration is heavily increasing export controls, particularly on the semiconductor sector in China, and it is expected that the Western partners will follow.
For banks operating in any of these markets, the volume and velocity of sanctions updates cannot be managed by current systems, creating unacceptable risk exposure. Real-time screening capabilities must be adopted to ensure customers are continuously monitored against sanctions lists, and not just at the point of onboarding.
With these key drivers in mind, financial institutions must now consider how to translate these insights into a compelling business case. Understanding the impact of TCO across different business lines is essential to securing stakeholder buy-in and driving meaningful change in compliance operations.
Building a business case, business-wide
While compliance teams are seeing the need for screening modernisation, the challenge often comes when articulating this across the relevant business functions. TCO needs to be calculated and expressed against all stakeholders’ pain points and priorities, and it is driven by more than just false positive reduction in financial crime compliance teams. Accurately calculating the TCO across all departments builds the business case for modernisation of AML solutions.
- Operations
To build the business case for the operational function, the focus should be on the high cost of legacy screening solutions due to manual alert handling, slow investigations, and high staffing requirements. Modern solutions reduce false positives, streamline workflows, and enable real-time compliance, lowering expenses.
- Risk
Risk teams are under an unprecedented amount of pressure meet regulatory compliance for a risk-based approach to financial crime compliance. Regulatory fines and reputational damage from screening failures are major risks. AI-powered screening minimizes false negatives while maintaining compliance, reducing regulatory exposure and safeguarding institutional reputation. To calculate the TCO, the risk function will be interested in mitigating risk in screening for sanctions and Politically Exposed Persons (PEPs) without increasing costs.
- Technology
Technology teams are grappling with organisational-wide requests for digital transformation and increasing oversight from regulators on data management. Calculating the TCO will involve considering that aging technology creates high maintenance costs and limits agility. Cloud-based, API-driven screening platforms lower infrastructure expenses, enable seamless integrations, and accelerate change management.
- Business
Ultimately, everything comes down to the business’ bottom line. Modernised screening enhances competitiveness by enabling banks to enter new markets faster, improve customer experience, and support digital transformation initiatives. It also reduces friction in onboarding, supporting revenue growth.
Calculating TCO for sanctions screening requires a comprehensive view of costs across all departments. The case for modernising financial crime compliance solutions is clear—lower operational expenses, reduced regulatory risk, faster technology adaptation, and enhanced business agility.
Learn how NextGen Client Screening can help reduce the risk of non-compliance for banks and improve operational efficiency, with clear steps on how you can overcome the constraints of legacy systems and move towards modernised, low-code, accurate and scalable client screening processes. Download: Sharpening Sanctions Compliance with NextGen Client Screening.
Photo by Greg Rosenke on Unsplash
