In 2020, criminals in the UK stole an estimated £1.26 billion, with nearly half of this stemming from financial fraud involving payment card fraud. This category, covering credit, debit, charge, and ATM-only cards, highlights the growing challenge for financial institutions to combat fraud. Alarmingly, nearly a quarter of all UK payment card fraud that year originated from abroad. As such, digital AML screening has become crucial in protecting financial systems, enabling quicker detection of fraudulent activities and enhancing compliance with regulatory standards.
What is Digital AML Screening?
Digital AML screening is an automated process that is employed to identify and combat money laundering and relevant financial fraud in banking institutes and relevant organizations. The process is conducted by scrutinizing the individuals and entities against global watchlists, sanctions, and regulatory databases. Before performing the digital AML screening process, it is important to conduct KYC and KYB authentication to confirm the actual identity of the persons. It assists organizations in enhancing efficiency and minimizing human error, which will ultimately ensure adherence to legal requirements by continuously monitoring clients.
Digital AML screening includes the recognition of politically exposed persons (PEP), executing enhanced due diligence for risky consumers, and using more screening systems. These attempts are important to meet AML-compliant measures and protect financial organizations against illegalities, which focus on the demand for continuous vigilance.
Four Major Archetypes of the AML Screening Process
Digital AML screening or the general constitutes four major types, which provide different methods of scrutinization, which are given below for better comprehension:
- Sanctions Screening
Sanction screening is the most advanced protocol, and it is conducted mainly to enhance AML efforts. Sanctions are the actual forfeitures that authorized departments on diverse individuals and countries implement. The important credentials provided by the acquired customers are checked against the lists, which are assembled and issued by both national and international bodies. It also includes entities that are forbidden from certain financial dealings.
- PEP Checks
A politically exposed person (PEP) is an individual who retains a prominent public position or a major role, mostly in government. PEPs are deemed as high-risk entities for financial establishments due to their prominent roles and approach to limited resources. These could be misspent for illegalities, including terror funding and money laundering.
- Adverse Media Mentions
Adverse media mentions any kind of publicity that a customer may have received, which is indicative of the potential hazards they impose on a financial entity. It usually involves major media outlets, blogs, articles, or public credentials that are presented to the individual or entity in a negative light, majorly in the embellishments of financial wrongdoings and the relevant disagreements.
- SIP and SIE Screening
Special interest persons (SIPs) and special interest entities (SIEs) are the classifications of persons that guarantee high monitoring due to their participation in criminal activities. SIP and SIEs are not particularly politically disclosed but are of interest just because of their association or engagement which brings up red flags from a financial crime perspective.
Why Opt for a Digital AML Screening Tool for Risk Mitigation?
Digital AML checks identify imposters on the spot and bring positive standard checks for risk mitigation for preventing financial losses and maintaining regulatory measures. Some of the following optimal advantages provided by digital AML regulation are given below:
- Real-Time Monitoring
- Less False Positives
- Vast Database Utilization
- Staying Updated on AML Developments
- Fast Customer Enrollment
- Cost-Efficient
Why AML Watchlist Screening Is Essential for Financial Security?
The AML screening process usually takes a few days to a week for thorough checks, as it involves authenticating credentials against multiple databases and watchlists. But, with advanced AML screening technology, this time can be substantially reduced. Financial institutions can now perform tasks like name checks and essential due diligence in just minutes or even seconds to speed up the initial stages of the process.
Enhanced customer due diligence, which involves a more detailed investigation, can take longer to complete. However, the use of advanced software solutions helps speed up the process, which helps in improving overall efficiency while ensuring thorough checks are conducted.
Concluding Remarks
The digital AML screening process is the updated version of the manual one, which is usually conducted through automated processes to maintain the global financial system. This approach has resolved many obvious issues and reduced the labor force. Achieving the AML screening goals is not an achievement, but it is considered an essential part of risk mitigation against financial reductions, reputational damages, and, most importantly, legal consequences.
