Payment screening allows banks and financial institutions to check whether incoming and outgoing payments pose a risk or are in breach of compliance regulations. But how to strike the right balance between cost and risk?
Checking customer data against sanctions and embargo lists costs money – but failing to detect a compliance risk can be even more expensive, resulting in severe penalties and reputational damage. What is to be done, particularly when financial regulators are constantly tightening the reins?
Financial regulators increasingly require the use of fuzzy matching. This means that it is still possible to identify risky transactions even if the name in the transaction does not exactly match the name on the sanctions list, perhaps due to typing errors or even the deliberate misspelling of names. The problem is that a fuzzy search always produces more hits than an exact search, which increases the workload of compliance teams.