Sanctions lists, watch and black lists deliver data of individuals and entities with a potential money laundering risk. For PEPs (politically exposed persons), enhanced due diligence requirements apply. Banks, insurance companies and financial service providers regularly screen and actively monitor new and existing customes to meet regulatory requirements.
Comparing customer data with PEP and sanctions lists is a component of risk management for any financial institution or insurance company. The automated screening of customer data propels more legal and reputational security.
To check risks, financial institutions and insurers require the data of persons on PEP and sanctions lists. These can be persons or legal entities with which no business relationship may be entertained due to legal requirements, or persons who pose a risk for the company’s reputation. The best-known, non-commercial sanctions lists are the EU and OFAC lists. Commercial list providers are World Compliance or Thomson Reuters (WorldCheck). As PEP and sanctions lists contain millions of entries, banks and insurers only have one option: to use risk-based software.
During sanction checking with ACTICO's Name Matching Customer software, various attributes can produce a hit, such as last name, first name, date of birth or country. Companies can decide whether the attributes need to match precisely, or they can opt for partially exact or fuzzy correlation with entries on a PEP or sanctions list. They can for example specify that the name, date of birth and country can be a 100 percent match while the first name is a similar match. This assures the quality of a hit even in case of spelling variations due to international names or misspellings.
In addition to the quality of a match, its priority is significant. For example, matches for a person listed in the "Crime" category are high-priority. On the other hand, if the person is listed as a PEP, this is considered to be medium-priority because a PEP does not constitute as an immediate compliance risk. Financial institutions can change the matches in individual priority levels. This process supports the risk-based approach recommended by anti-money laundering laws, giving banks and insurers more freedom in designing their compliance policies.