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News

Higher compliance risk without Customer risk screening

Datanomic : 20 October, 2009  (Technical Article)
The Financial Services Authority has issued a report detailing the risks associated with running systems which aren't capable of consistent sanctions and risk screening
Many large financial institutions are failing to implement consistent policies and procedures for sanctions, PEP (Politically Exposed Persons) and customer risk screening due to inconsistent, legacy-based systems, according to compliance screening and data management specialists, Datanomic. Fragmented and inconsistent legacy platforms with different criteria and capabilities deployed across multiple departments and/or countries are resulting in substantial audit problems, impairing consistent enforcement of corporate policies. This fragmented approach is leading to potential failures in identifying sanctioned individuals and increased risk of fines from regulators.

In its recent report, "Financial services firms' approach to UK financial sanctions", produced by the Financial Services Authority's (FSA's) Financial Crime and Intelligence Division, the FSA highlights "many instances where country specific and/or business unit policies and procedures fail to meet the minimum standards set out in the group wide policy." The report also indentified weaknesses in major financial groups' systems and controls, which made it difficult for them to comply with their policies in relation to UK financial sanctions. These weaknesses often arose from the difficulties of operating multiple legacy IT systems across the group.

"Firms that operate in a number of countries, need a consistent group-wide policy to assist local business units in ensuring that their local procedures meet minimum group requirements," said Simon Pearson, Director of Compliance Screening at Datanomic. "We've seen numerous instances of large global financial giants risking millions in fines and penalties through their inability to flag individuals and entities adequately across countries, departments and systems. Both international and domestic screening regulations and compliance requirements have strengthened almost every year, yet only a handful of the large financial conglomerates have realised the need to implement a consistent system across all regions and departments to ensure 100 percent compliance and adherence to corporate policies and procedures."

Many large firms are now in the process of devising or implementing a single firm-wide IT system to tackle these issues. Earlier this month, Barclays announced that it is standardizing on Datanomc's dn:Director Sanctions & PEP Screening software as its preferred solution for its next generation customer screening platform to combat the problem of inconsistent and disparate systems across its global operations . The Datanomic software will replace multiple customer screening solutions across many geographies and will provide Barclays with unparalleled accuracy for systematic screening in both Western and non-Western languages/character sets.

"Large globally dispersed financial institutions, such as Barclays, need a multi-disciplinary solution capable of creating and enforcing globally-consistent corporate policies and procedures," added Pearson "All staff must be trained and held to the same standard, and this is only possible through the implementation of best-of-breed technology, incorporating screening software such as dn:Director that has the ability to work with both western and non-western scripts. Traditional text-based matching is insufficient for global screening, and contextual processing of cultural variations of both western and non-western script names is essential."

To address the growing need for comprehensive global screening, Datanomic has integrated its dn:Director Sanctions & PEP Screening software with IBM's Global Name Recognition (GNR) Technology to create the industry's most powerful software solution for compliance screening. The fully integrated solution integrates GNR with dn:Director as a series of dn:Director processes, combining rich functionality that delivers accurate, systematic screening in both Western and non-Western languages/character sets.

Datanomic's dn:Director Sanctions & PEP Screening software provides a single, consistent company-wide platform, enabling organisations to rigorously and systematically screen their customers against Sanctions, PEP, money laundering, terrorist financing and other risk data sources in both Western and non-Western languages/character sets. Industry-leading accuracy and Datanomic's unique 'Decision Intelligence' drive down compliance costs by reducing the burden of false positives. End-to-end data preparation, case management, workflow, auditability and reporting tools ensure that businesses are protected from compliance risk.

Datanomic's Sanctions & PEP Screening software is currently screening in excess of two billion customer records every month and, as such, is recognized as the platform of choice by two of the top ten global Retail Banks, one of the world's largest Hedge Funds, one of Europe's leading Merchant Banks, one of the world's largest Investment Banks, more than half of the UK's Top 10 Wealth/Asset Managers, one of the oldest stock broking firms on the London Stock Exchange, and some of the UK's largest Insurance companies.
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