Whether you are a bank, financial institution, or business, the purpose of identity and sanction services is to help prevent money laundering and bribery and identify and prevent terrorist financing. These services will help you understand the sanctions of the countries you work with. This includes identifying the sanctioning bodies, keeping up with these bodies’ screenings, and reducing the risk of false positives.
Know Your Customer (KYC) Procedures
Whether you’re a banking institution, investment broker, accountant, car dealer, or another organization, Know Your Customer (KYC) procedures are critical to your onboarding process. Verifying customer identities can create a more secure environment, avoid business relationships with criminals, and safeguard your brand.
The Know Your Customer standards are designed to prevent fraud and money laundering in the financial sector. Each year, millions of dollars are laundered via financial systems. These criminal activities can affect other customers and the wider economy.
A risk-based approach to KYC evaluates the potential risks of creating accounts and completing transactions. These procedures can be applied to new accounts as well as existing ones.
Identify Sanctioning Bodies
Sanctions prevent companies from doing business with sanctioned entities and can be used to keep your organization and your customers safe. Whether you’re in the health care or financial services industries, identifying sanctioning bodies is a must. The list is constantly changing, so you must ensure that your screening practices keep up.
Consider using a sanctions list screening service to ensure that you’re avoiding illicit trade with sanctioned entities. The list includes names, organizations, and countries that have been sanctioned. Consider using data enrichment software to improve your data collection.
Prevent Money Laundering, Bribery, & Terrorist Financing
Identifying and sanctioning customers is a critical function of a bank’s anti-money laundering compliance program. Banks that do not adequately identify and sanction their customers may face sanctions and reputational damage.
Identifying and sanctioning customers includes a customer activity review. This review looks for suspicious trends in transactions and patterns of behavior.
The Financial Action Task Force (FATF) is a global organization designed to fight money laundering. The FATF is responsible for defining money-laundering predicate offenses and issuing 40 recommendations. FATF also publishes interpretive notes to the recommendations.
Money laundering is a process in which illicit funds are layered over transactions to mask the sources and locations of the funds. This is often done with a cash-based business. Some money launderers use cashier’s checks, international money orders, and credit cards.
Reduce The Risk Of False Positives
Using identity and sanction services is a great way to protect your company and employees from unscrupulous competitors. However, the risks are real, and you need to be able to detect and prevent them. Good data enrichment software can help weed out fraudsters from legitimate customers.
A solid AML program should provide you with a comprehensive database of information and a means to update it in real time. The best way to do this is to set up a robust sanctions screening program to keep you clear. You should also implement a risk assessment program to determine your level of risk exposure and implement effective controls to mitigate the worst scenarios.
Up-To-Date Data Is Key
Whether running a large or a small business, you will need a robust and up-to-date identity and sanction services program. You also have to be able to perform simple checks to ensure that you’re not getting fooled into making transactions with sanctioned entities.
Sanctions constantly change, so you need a way to track the latest lists. One of the best ways to do this is using data enrichment software. It’s a program that uses existing customer data to create potential matches for sanctions targets. It can be done automatically, but it’s also possible to perform name screening manually.
Keep Up With Sanctions Screening
Keeping up with identity and sanction services screening is integral to AML and KYC compliance. The process is intended to minimize financial crime and fraud, protect the organization and its legitimate customers, and prevent trade with sanctioned entities.
Screening involves checking against an ever-changing watchlist. Ideally, the screening process is automated. In addition, it should be repeated at specified intervals. If an individual’s identity matches a sanctioned individual, a report should be filed with the reporting officer. This will ensure compliance with regulations and eliminate risks associated with willful sanctions violations.
Regulatory bodies issue sanctions lists in the United states and other countries. These lists are updated to keep up with the latest world developments. They contain various information, including passport numbers, aircraft tail numbers, and nationalities. They may also include aliases, dates of birth, and other identifying details.