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News

Lack of ongoing screening leaves financial organisations exposed

Datanomic : 17 November, 2009  (Technical Article)
Datanomic explains the importance of continuous sanction screening on clients of financial services organisations
Compliance screening and data management specialist, Datanomic has outlined how financial services organisations are exposing themselves to financial penalties if they fail to recognise the importance of ongoing and systematic client screening. Many companies still believe that ad-hoc screening of its customer base is enough. However, such lack of understanding and irregular practice leaves organisations open to considerable reputational risk and financial penalties associated with a sanctions breach.

Data never remains a static entity as it changes and is dynamic in nature. International Watch Lists are regularly updated and contain the names of hundreds of thousands of individuals that pose a threat - from money laundering offences to terrorism, often operating under an alias. Likewise, the status of a customer may change over time along with the details relating to customer data. As new customers are added and information is updated, the data within a customer base can change dramatically.

"Compromised data exposes organisations to both financial and reputational risk. When you think about a Risk Management cycle, it's all about ongoing evolution, change and improvement," said Simon Pearson, Director of Client Screening for Datanomic. "Worryingly, there are organisations out there that only ever screen their customers infrequently - in some cases only once a year. The practice of only checking customers once when they open an account is irresponsible. There is a real risk that an organisation could be unknowingly harboring or dealing with sanctioned individuals, including terrorists, fraudsters, drug traffickers or money launderers."

Through the implementation of a systematic and comprehensive screening programme, client data should be regularly screened against global sanctions lists to ensure that any sanctioned individuals or entities in a client base are exposed. A measured and ongoing approach to client screening ensures organisations address their screening responsibilities in line with compliance regulations set out by regulators. It also reduces the possibility of financial penalties that can be levied on those companies that fail to meet their client screening obligations.

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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