A critical objective of a financial crime risk management strategy is to ensure a rapid and agile response to new or evolving AML-CTF risks. Screening programmes that respond quickly and effectively to new compliance expectations not only reduce institutional risk exposure: they can also ensure that sanctions targets have less time to move or hide assets. 

However, achieving speed-to-compliance that is effective and sustainable operationally is increasing difficult. These challenges have increased in the contemporary context of complex, expansive and high velocity international sanctions following the invasion of Ukraine by Russia.  

In addition to the continuous assessment of threats and regulatory requirements, a strategic FCRM plan must also consider the capacity and utility of operations and technology resources. Components of an AML-CTF control framework that are critical in delivering speed-to-compliance include: 

List Management

Ensuring that all the sanctions lists required by an institution are available in screening programmes has become an increasing complex task. Unique list requirements are set by many different jurisdictions and by multiple government agencies within those jurisdictions; and these agencies can publish multiple lists. Operational complexity is increased by multiple types of data formats and targets. At the same time, a higher update velocity must also be managed to ensure that all required list data is available for continuous screening. Managing these tasks requires list management software that can be configured quickly in response to increases or changes in any of these variables and that there is adequate capacity to address future demands.  

Data quality assurance

Whilst there are laudable initiatives to standardise the formats of sanctions lists, it remains the case that an institution is likely to source sanctions data in many standards or formats. Once retrieved, these disparate data sets are typically primed for screening using various data management processes. Ensuring the speed, accuracy, consistency, and resilience of these processes is critical. As a result, additional investments are being made in data management and governance capabilities to improve data configurability, real-time reporting, and operational analytics – with the objective of ensuring the timely response of screening technology to compliance policy objectives. 

Screening speed and scalability

The expectation that screening technology will respond promptly to new compliance requirements is accompanied with the assumption that compliance goals will be met without compromise to search accuracy or performance. However. adjusting to increasing operational load and heightened expectations, whilst maintaining, if not improving, speed, is increasing difficult if incumbent screening technology is constrained by technology debt. This requires institutions to reassess whether screening operations can continue to deliver sustained operational excellence – and for how long – or if newer technology can provide improved speed, risk detection and scalability to increasing data volumes. 

Tuning and testing

Increases in the range of direct and in-direct sanctions targets have the potential to slow down compliance processes, especially if screening systems are not supported with additional resources. The traditional short-term response of adding headcount to operational capacity might still be valid but investment in AI-led automation is increasingly preferred. However, either approach can be made more effective and efficient by more focus on the upstream modelling and testing of the impacts of new screening requirements. To avoid a compliance gap, this testing should take place in real-time, without incurring an operational penalty. 

In summary, the pace and intensity of today’s regulatory compliance requirement is placing additional demands on screening operations. Technology innovation that delivers low-latency processing and capabilities for handling massive data can mitigate these challenges whilst increasing speed-to-compliance and providing additional capacity for future needs. 

The next post in the series will consider the challenges of improving the compliance effectiveness of screening and how technology can lead the response.