The 8 Best Benefits of Implementing a Comprehensive Sanctions Screening Solution

Financial crimes have very real effects, not just on the world economy but on the lives of ordinary individuals as well. For this reason, financial institutions need to make sure that the software they use to combat bad actors offers a meaningful level of functionality. To meet this goal, a sanctions screening software needs to be capable of effectively cross-referencing data sources throughout the world. 

While older software is often adapted to meet current challenges, in anti-money laundering (AML), this strategy often results in errors and poor functionality. Upgrading to an up-to-date and comprehensive sanctions screening software tends to be the better option in most cases, particularly when high volumes of transactions are involved.

Below are some of the best benefits from using more comprehensive sanctions screening software:

1.) Hassle-free Compliance

Using newer software will almost always make it easier for your financial organization to comply with relevant financial legislation. AML activities have to be done in compliance with any laws germane to a particular transaction. Older and non-compliant AML software often requires users to take extra steps before they could complete specific actions, increasing the time it takes to properly vet a transaction. These delays can cascade into all kinds of different issues, all of which could be avoided with a better sanctions screening solution. 

2.) Fewer Downtimes

Generally speaking, sanctions screening software is getting more reliable with each new generation, particularly systems that use good 3rd party cloud hosting services. Having AML software hosted on a specialized cloud service not only allows users anywhere to access business-critical tools, but it also has the bigger benefit of being more reliable as well.

While self-hosted solutions could be dependable, the costs of creating such a system often outweigh the benefits due to issues of scale. For most institutions, going with a specialized hosting service maintained by a reputable provider will result in fewer and shorter downtimes.

3.) Reduced Maintenance Costs

Not only does newer sanctions screening software tend to be more reliable, but these systems also tend to cost less to maintain. 

Again, scale matters. Most businesses cannot focus on day-to-day server maintenance in the same way a specialized hosting service can. Financial institutions that opt for newer cloud-hosted AML software will find that the cost of maintenance is much lower compared to that of systems that require onsite hosting, as there are no physical assets to buy or maintain. What’s more, IT and system administration teams are freed up to do other pressing tasks.

4.) Better Pattern Recognition

Rogue states, terrorists, and criminals are constantly innovating ways to circumvent known AML systems. This often means that sanctions screening solutions can become out of date after just a few years as these bad actors learn new ways to hide dirty money. 

Thankfully, newer systems feature better pattern recognition and can flag even novel attempts at beating them. This can help take a load off the jobs of analysts, allowing even a small team to handle large volumes of transactions in a timely fashion.

5.) Reduced False Positives

Better pattern recognition isn’t just good for identifying real money laundering activity. It can also help prevent innocent individuals from being wrongfully tagged as well. 

False positives are almost unavoidable in AML. Regardless, when not handled well, they can lead to negative client experiences. When the number of false positives is high, the business may start losing clients to competitors. However, financial institutions also have a responsibility to perform their due diligence in identifying fraud and money laundering activities.

With the better machine learning algorithms on newer sanctions screening software suites, financial institutions no longer have to worry about excessive false flags when countering bad actors. With many updated AML systems, there’s no need to sacrifice branding and client experience for better functionality.

6.) Seamless Interplatform Integration

Because AML and sanctions screening are complex undertakings, different activities are often handled in different parts of a wider AML system. These discrete parts may not always be programmed in the same language or even run on the same platforms, adding a new layer of complication that can cause delays and obfuscate criminal activities. 

Current generations of sanctions screening software are developed with seamless integration in mind. This not only reduces the amount of work needed to get the whole system working as it should, but it improves accuracy and timeliness as well. This not only makes things easier for users of the system but also helps with cross-referencing and meeting single source of truth (SSOT) standards.

7.) Smarter, More Accurate Reporting

Better integration between the different parts of an AML system invariably leads to more accurate and timely reporting due to the reduction of bottlenecks in the data provisioning process. 

However, the benefits for reporting don’t stop there. New AML systems are generally designed with the knowledge that not all decision-makers have time to second-guess the accuracy of the data used to generate reports. To help with decision-making, many new systems incorporate smart visualization functions that directly draw from extracted data. As a result, timelier and better-contextualized information could be readily made available to whoever needs it.

8.) Better ROI

Taking all those previous benefits together, updating sanctions screening software to current standards means a smaller team could handle a larger volume of transactions. This results in a reduced labor cost for a much higher level of productivity. Coupled with lower maintenance costs, better uptimes, and fewer process bottlenecks, updating anti-money laundering systems almost always results in a better return on investment compared to maintaining an outdated one.

It Is Time to Update Your Sanctions Screening Solution

While there are legitimate reasons for delaying some software updates, these do not apply when it comes to AML and sanctions screening. Thankfully, choosing to update these types of systems not only keeps financial institutions and their clients safe from criminal activity, but it also helps reduce the costs and risks of doing so.