Protect your business with compliance screening

Why compliance screening?

Compliance screening is used to identify which customers or potential customers have risk associated with them. The overall aim is to find out whether customers are or could be linked to money laundering, bribery, corruption, terrorism financing, or any other kind of financial crime either now or in the future.

Failing to screen existing and prospective partners against a database can expose your business to risk. This can range from minor annoyances to a damaged reputation, financial losses, sanctions breaches and loss of business. It can even lead to criminal proceedings.

What is compliance screening?

In simple terms compliance screening is a way of ensuring that you are dealing with trustworthy customers/partners. Although screening initially involves obtaining information about the customer or potential customer, the screening process is effective when it is properly set up to assess and respond to risk.

Red flags used to identify risk may include:

·         international sanctions

·         criminal activity

·         terrorism

·         harm the reputation of the business

·         being politically active

Once the initial screening has been done, the business must consider what actions needs to be taken in order to minimise the company’s exposure to risk.

Compliance Screening – The Choices

Compliance screening can be done on a single entity alone or extended to take into consideration the company name, trade styles, CEO names, the names of shareholders and any direct line entities between the company and the ultimate holding company. Screening can be done on entities and individuals which may include watchlists, blacklist, media review, proprietary databases.

In addition to relying on information provided by the customer it can also be advisable to extend the scope of screening to include data from all sources available including negative media. It is also possible to have the data analysed by experts in order to remove any false positives which might appear in the screening process.

The Limitations of Screening

Long-standing companies may be overlooked in the screening process but even if a company has done business with you for a long time it is important to continue the assessment of their potential risk.

Compliance screening can play a critical role in protecting the business from financial crime, but it is essential that it is followed up with effective strategies to monitor and block financial crime.

Even if the risk is considered to be minimal, all screenings and results should be meticulously logged. This is so that it is easy to provide the necessary documentation to confirm compliance even if it is requested years after the initial screening.