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News

Libyan Crisis Causes Knock-On Problems In Compliance Screening

Datanomic : 05 April, 2011  (Technical Article)
Risk management and compliance screening to prevent money laundering and financial fraud takes a battering during Libyan crisis due to the variants of anglicised spellings of transliterated Arabic names

Aside from the more serious human cost, the Libyan crisis is having a knock on effect for compliance teams and their Anti Money Laundering screening systems, according to Risk & Compliance screening and enterprise data management specialist, Datanomic. The Libyan crisis is creating an increased workload for compliance teams who are manually checking false positives caused by compliance systems that cannot deal with the Romanized variations Libyan Arabic, such as Gadhafi, Al-Qadhafi, el-Qaddafi, Khaddafi, Gathafi and many more. Banks, Insurers and Investment firms worldwide are having to employ additional resources to research and investigate mountains of data, increasing the risk of a sanctions breach through poor screening systems.


The UK Treasury has frozen the assets of Libyan leader Muammar Gaddafi and five family members, and the European Union has frozen the assets of The Libyan Investment Authority (LIA) wealth fund, which holds about $70bn (£43bn). Likewise, the US has also frozen about $30bn of Libyan assets, including those of the LIA and central bank.


The Libyan Investment Authority has shares in a number of European companies, including a 3.3% stake in Pearson, who own Penguin books and the Financial Times, and London property estimated to be worth £280m. With 112 alternate spellings for Gaddafi, variations in the transliteration of Arabic mean few systems are capable of screening them all.


For companies with poor screening systems this is compounding the existing challenges of translating Arabic to Latin characters. With no accepted standard for transliterations, companies need to ensure that alongside their own customer's name and known associates, for example, they are also screening for recognised name variances, even when the data is held in the local alphabet. MLROs and compliance officers the world over know that effective, accurate screening of data held in foreign alphabets requires a complex blend of transliteration, transcription and translation. Today’s multicultural society means that companies are likely to have many customers with names whose etymology is beyond the national alphabet, such as the anglicised versions of the Arabic name Qaddafi as well as towns, cities or other data.


“If your system does not effectively manage transliteration or name equivalencies you are running the risk of a dangerous false negative result,” said Simon Pearson, VP Risk & Compliance at Datanomic. “Since name variances are a common problem in screening data, you could also be generating mountains of unnecessary false positives. Likewise, companies trading globally and holding data in foreign alphabets, such as Arabic, Chinese, Hangul (Korean), Cyrillic, Japanese (Katakana, Kanji and Hiragana) potentially face significant problems with compliance teams needing to screen against the international watch lists - such as OFAC, HMT, EU, UN - which all contain Latin data. The result is a far greater compliance workload investigating potential matches manually, increasing complexity and operational cost.”


To address this, Datanomic's dn:Sentry Customer Screening system allows effective transliteration and equivalencies matching against 45 different language scripts, handles multiple input alphabets simultaneously, and provides a solution for name variance screening even when data is held in native script. Unlike other solutions Datanomic can match against names that have been rearranged, with letters missing or switched. dn:Sentry can use all data available to find any possible links to the sanctioned individual. Datanomic’s advanced algorithms, concatenation, parsing and profiling capabilities, make Datanomic the best solution for identifying sanctioned individuals.

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