AML
Screening
AML/CTF guide for
compliance professionals
What is AML screening?
AML screening is one of the methods used for risk assessment of a company’s
existing or potential customers under AML guidelines.
With AML screening, businesses
ensure that their existing or
potential customers are not
present in any of the sanctions
lists, PEPs, banned or wanted
lists, and adverse media data.
Performing screening of your
customers is the main element
of the AML compliance program
OBJECTIVES OF
AML SCREENING
Protection
Make risk Avoid
from
assessment violating
regulatory
sanctions
fines
When to perform AML screening?
Companies have to perform AML
screening during the account opening
process.
As risk levels of customers change over
time. Companies should regularly check
the risk level of their customers with
screening.
Businesses must perform AML screening
in their employment processes as well.
Companies are also required to perform
AML screening of the ultimate beneficial
owner of any firm they are doing business
with.
Regulatory Entities
The Office of Foreign Assets Control (OFAC) is a financial
intelligence and enforcement agency of the U.S. Treasury Department.
It administers and enforces economic and trade sanctions in support
of U.S. national security and foreign policy objectives.
The Financial Action Task Force (FATF) is an intergovernmental
organisation founded in 1989 on the initiative of the G7 to develop
policies to combat money laundering.
The Financial Crimes Enforcement Network (FinCEN) is a bureau of
the United States Department of the Treasury that collects and
analyzes information about financial transactions in order to combat
domestic and international money laundering, terrorist financing, and
other financial crimes.
Regulatory Entities
The Office of Financial Sanctions Implementation (OFSI) helps to
ensure that financial sanctions are properly understood,
implemented and enforced in the United Kingdom. OFSI is part of
HM Treasury.
Databases used by Gemini
ComplyAdvantage is a FIS product which provides search capabilities of aggregated
government watchlist and Politically Exposed Person (PEP) Data including OFAC watchlist
and adverse media data.
The company offers AML onboarding and monitoring, AML
transaction monitoring, payment screening, and politically exposed
persons (PEPs) and adverse media screening. ComplyAdvantage
also offers real-time sanctions and watch list screening using global
lists maintained by the Office of Foreign Assets Control (OFAC),
European Union (EU), United Nations (UN), Department of Foreign
Affairs and Trade (DFAT), and other governmental, law
enforcement, and regulatory databases.
Databases used by Gemini
Blockscore Cognito ("cognito") is an online system provided by blockscore which,
provided a USA cell phone number and First/Last name, validates the ownership of the
number by the identity and provides additional metadata such as the age of the
account and previous owner.
Customer Identification Program (CIP)
The CIP must include risk-based procedures
for verifying the identity of each customer to
the extent reasonable and practicable. The
procedures must enable the bank to form a
reasonable belief that it knows the true
identity of each customer and be based on
the bank’s assessment of relevant risks.
For more information on the BSA/AML Gemini
program please go to:
https://bsaaml.ffiec.gov/manual/AssessingCompli
anceWithBSARegulatoryRequirements/01
What is Customer Due Diligence?
In accordance with regulatory requirements, all banks must
develop and implement appropriate risk-based procedures
for conducting ongoing customer due diligence, including,
but not limited to:
Obtaining and analyzing sufficient customer information
to understand the nature and purpose of customer
relationships for the purpose of developing a customer
risk profile; and
Conducting ongoing monitoring to identify and report
suspicious transactions and, on a risk basis, to maintain
and update customer information, including information
regarding the beneficial owner(s) of legal entity
customers.
Enhanced Due Diligence?
EDD involves adopting a risk-based approach to investigate certain clients' identities even further, and
gathering further information on their reputation and history. EDD is only necessary with clients who have
been identified as posing a high risk of involvement with financial crimes like money laundering.
When assessing customer risk for EDD purposes, be on the
lookout for:
1. Clients who are politically exposed persons (PEPs), in other words
people with high-profile political roles or who perform prominent
public functions.
2. Clients who are special interest persons (SIPs), in other words those
who have a known history of involvement with financial crimes.
3. Clients who have sanctions against them.
4. Clients who feature in a high volume of negative media.
5. Clients who have a high net worth.
6. Clients who are involved in unusual or complex transactions.
Geographical high risk factors:
Countries that have sanctions or embargoes against
them.
Countries on the Financial Action Task Force’s (FATF)
list of Other Monitored Jurisdictions (greylist).
Countries on the FATF list of Call for Action
Jurisdictions (blacklist)
High-risk third countries.
Countries containing proscribed terrorist
organisations (Bear in mind that the UK is on this
list).
The above geographical risk factors indicate a
higher risk of terrorist financing.
Sanctions
Economic sanctions are commercial and financial penalties applied by one or more
countries against a targeted self-governing state, group, or individual. Economic
sanctions are not necessarily imposed because of economic circumstances—they
may also be imposed for a variety of political, military, and social issues.
Global Sanctions
Regime
As set out in the regulations,
the Global Human Rights
sanctions regime is aimed at
deterring and providing
accountability for serious
violations of an individual's
human rights. The regulations
impose sanctions to deter
those who are, or have been,
involved in human rights'
violations.
Global Sanctions placed on Russia
What is a false positive?
it is an alert generated by the system that
requires investigation by a compliance specialist,
while in reality the scanned name is not the same
blacklisted entity.
THANK
YOU
If you have further questions,
feel free to reach out
