Financial crime video series: 5 points to consider for an effective sanctions screening programme

Christian Blackwell

Hello and welcome to the next in our series of videos on financial crime. I am here today with Tunde Fasoyiro to talk about five key areas to consider when looking at a sanctions screen programme. Tunde, what's the most important factor that we need to consider when looking at sanction screening programmes?

Tunde Fasoyiro

I think for sanctions, risk assessment is key. I would say financial institutions should identify and assess the sanctions risks that they are exposed to in order to implement an effective sanctions screening programme, taking into account the jurisdiction in which they operate, the business they do, their business relationships, the location of their customers and the businesses of their customers. With all this in mind then I would suggest that financial institutions then put in place, implement robust policies and procedures as well as an adequate training programme for screening staff.

Christian Blackwell

So we've got the risk profile. What do they need to consider next? 

Tunde Fasoyiro

I would say the firm should consider implementing a robust set of controls. It is quite common for financial institutions to have two main controls: one is the customer screening control and the other is a transaction screening control. With the customer screening control, screening customers at on boarding and during the life cycle of the relationship and then you have the transaction screening control which screens transactions of customers as well as entities to identify any targets that might result in sanctions hits.  

Christian Blackwell

And how far do you think companies can place reliance on counterparties' screening tools?  

Tunde Fasoyiro

Irrespective of screening tools of another financial institution, I would say it's important, it's imperative that financial institutions themselves still carry out their own risk controls. It has been known there's a convention that a fair amount of financial institutions tend to place reliance on the controls that all the financial institutions that they're doing businesses with in domestic transactions to satisfy themselves that that is sufficient for them to determine whether there are any targeted individuals or entities. I would say that this is sufficient and it is clear that a fair amount of financial institutions have been found to be violating sanctions as a result of not placing sufficient reliance on their controls but placing the reliance on the controls of other counterparties and that has led to fines. 

Christian Blackwell

So data is obviously key in this.  

Tunde Fasoyiro

Oh, yes. 

Christian Blackwell

And data from multiple sources, obviously I can see that. Is this an issue? Data from different sources?

Tunde Fasoyiro

Yes, the aggregation of data could result in a number of data issues, data integrity issues because you might find out that some data is not necessarily accurate or up to date, so it is important to make sure that every data source and every data list is carefully assessed to make sure that they are pretty up to date and of good quality.

Christian Blackwell

And, what's your view on the actual sanction screening tools that are used?

Tunde Fasoyiro

Each financial institution is unique in what they do, in their jurisdiction and the customers that they do business with. With this in mind, a financial institution should determine whether they want to build their own screening solution in house or whether they want to seek the solutions of a third party supplier. They should take into account their functional requirements, the technology available in order to do this. They should also take into account configurability of data, screening rules and other sort of solutions that would help them to have a robust screening programme in place.