Why Overlooking the Watch List Screening Means a “Trouble”?

Screening of customers, suppliers and business partners against the restricted entities is typically performed to achieve a minimum of four objectives, which includes:

• Stop transactions with denied and restricted parties and persons

• Extra diligence to keep track of high-risk customers and Politically Exposed Persons

• Identify suspicious activity, such as money laundering and funding of criminal activities

• Take negative news into account, especially those related to banned entities

Before we get into the major part of the topic, we would also want to highlight that in some areas screening hasn’t been effective as it should. For example, there is a potential gap seen while tracking counter-parties that could be involved in money laundering acts.

When we discuss watch list screening, a major emphasis is turned upon real perpetrators in the business. For example, it could be a drug cartel leader, a terrorist organization’s leader, or anybody in the supreme position of an organization indulged in suspicious activities. Since they are over-screened for, again and again, the potential gap in AML screening has become a great cause of worry. Though steps for Anti Money Laundering based screening has been taken up positively, it is yet to cover a long distance.

The definition of PEPs or Politically Exposed Persons has become so vast that it hardly leads to any conclusion. Companies and organizations, at the behest of such a flaw, have throttled their customer screening of perpetrators in an aggressive manner. Although it is quite a counterproductive process, even more complicated than the process of OFAC screening, the organizations increasingly want to utilize more legitimate information before dealing with any customer/trader/partner. Reducing over-screening may help in bolstering efficiency at all levels.