Maintaining security is very important in this rapidly changing world of international financial and business sectors to show that they are reliable. Watchlist screening is a procedure that has become very important in the management of risks. This blog shows us the importance and benefits of using this watchlist screening to streamline the ongoing watchlist screening procedure.
Importance of Watchlist Screening
Watchlist Screening (WL) is very important in identifying and mitigating risks which are associated with entities that could pose a threat. Its main goal is to cross-check the names who have any type of background that has Red Flags in it like politically exposed persons (PEPs) or systems involved in illegal activities
Therefore streamlining your watchlist is very important to stay ahead and point out the potential risks caused by individuals, company, or while onboarding new customers this helps to give quick and accurate results
Global Watchlist Screening
It is a compilation of data from worldwide and has the names of individuals, groups, and businesses who have background information of themselves involved in illicit activities and violation of international laws this list is regularly updated with names. This list includes information on terrorism, Anti-Money Laundering (AML), Criminal activities, and Fraud
The watchlist screening system identifies potential threats that can be possessed by any entity that has been involved in illegal activities and this data can be fetched from the global watchlist to be sure and protect them from reputational damage
Case study
In the case of Westpack’s bank settlement with AUSTRAC, the bank paid the heavy fine of $1.3 billion in 2020 which not only cost them financial trouble but also reputational damage. It was not only the case of simple Anti-Money Laundering (AML) but this happened due to the failure of the watchlist screening service which was not implemented effectively
Benefits of streamlined watchlist screening
- Automated watchlist screening service
It uses Artificial Intelligence (AI) to streamline watchlists which would have been impossible manually it compares the collected data in no time gives the exact match and saves time. The AI can be trained to recognize the patterns which help to recognize the potential risks
- Data Quality
Poor data can lead to the failure of the procedure so the quality of data is very important if sources of the data which is under assessment are not correct it can lead to errors and duplicate records so it is very important to make sure that watchlist monitoring service is used to increase the quality of data also the standardization of data is very important
- On-Time Risk assessment
Streamlining the watchlist screening system helps to do continuous monitoring and covers all the gaps for finding fraudulent activities this helps the changes appearing in watchlist screening to be evident. It helps to highlight the High-Risk entities for more complicated and In-depth inspection
- Regular audits and assessments
Streamlining watchlist screening helps to do regular audits of the watchlist screening program it is very important and helps to find out the areas for improvements thus when the system is well organized it helps to track down the data very easily the auditing helps to point out the area which requires attention and immediate actions are taken on it
- Accuracy & Customization
Streamlining watchlist screening helps to reduce the chances of false positives by minimizing errors on the other hand applying such techniques so that the system becomes more efficient in this way reducing the chances of false negatives helps to maintain proper checks and balances for accurate results. customization can also be done according to our requirements for getting the results we wanted
Consequence of not streamlining watchlist screening
- Delayed risk response: Not streamlining the watchlists takes time to point out the risk that can cause a threat to the organization
- No improvement: An inefficient screening system has no chance for improvements which can cause missing of the potential risks and the advanced software techniques also not work effectively
- Reputational Damage: Responses are delayed due to the ineffective watchlist screening this can harm the reputation of the organization which can destroy the trust of old and new clients and partners working with that organization
Conclusion
At last sanction & watchlist programs are very important and streamlining them gives an extra advantage in protecting the organizations from irreparable damages