May 21, 2024

10 Common Mistakes to Avoid in Global Watchlist Screening

  • March 18, 2024
  • 4 min read
10 Common Mistakes to Avoid in Global Watchlist Screening

Global watchlist checks are an important process in businesses. As it helps them in figuring out people and other entities that may be involved in crimes like terrorist financing and bring some degree of risk to the organization. Even though this is a must have process, many businesses still are unable to make the most out of it. And make mistakes and end up decreasing its effectiveness.

Lack of Understanding of Watchlist Screening Requirements

The first and foremost mistake that businesses make when performing screening is that they do not have enough understanding of the entire process. Because of this they fail to make the most out of it. Therefore, it is very important for them to understand how the regulatory framework and guidelines about watchlist screening work. And how they can use it to comply with AML and CFT guidelines. 

Inadequate Risk Assessment and Scoring

Another mistake that businesses make is that they skip the process of risk assessment and scoring and directly perform watchlist screening. When they are not aware of the risks the organization is facing, they are unable to customize their watchlist screening processes.

Over-Reliance on Manual Processes

Businesses sometimes depend a lot on manual processes when it comes to performing global watchlist screening. And this leads to human errors and the process becomes inefficient. Manual reviewing is important to some extent but it is essential to support it with automated solutions. As they can help in increasing its accuracy. 

Failure to Update Watchlist Databases Regularly

Static watchlist data sets become obsolete very quickly, and this leads to them missing out on alerts and results in breaches of compliance. It is important for businesses to make sure that they have access to adaptable watchlist screening solutions. That can be updated from time to time. 

Incomplete Customer Data and Inadequate Data Quality Checks

Incorrect client information can decrease the adequacy of global watchlist screening. Therefore, businesses must make sure that the checks they perform are of high quality so that the credibility of the data information can be checked.  

Lack of Integration with Customer Due Diligence (CDD) Processes

Global watchlist screening can be integrated with CDD processes as they help in making compliance easy and smooth and also improve the risk assessment. When a business does not integrate these processes, it can lead to ineffective compliance and also place a greater burden on the business operations.

Insufficient Training and Awareness Programs

Staff that is responsible for performing the dynamic watchlist screening should be given training and awareness programs must be conducted so they are able to understand their job roles better. If training is not given, they may ignore red flags and may not be able to understand alerts. 

Failure to Document and Retain Screening Decisions

Recording and documenting all screening decisions is also very important when it comes to audits and compliance. Businesses should be able to set guidelines and rules about documenting the results that are received from screening. This must include details about false positives as well.

Neglecting Politically Exposed Persons (PEP) Screening and Sanctions Screening

Politically exposed persons (PEPs) bring their own unique risks when they are involved in illegal activities like corruption. Sanction screening, on the other hand, contains names of all people or businesses who have been sanctioned. When sanctions or PEP screening is not done, businesses expose themselves to greater risk and might also be examined by authorities. 

Lack of Ongoing Monitoring and Review

Global watchlist screening is more than just a screening process that is enough for one time. It is a process that needs to be performed continuously so that no update is missed out. Businesses should be clear about their monitoring of customer relationships and transactions so no unusual activity is left undetected. 

Should Global Watchlist Screening Be Part Of Every Organization?

By looking after these 10 common mistakes and not letting them ruin your business operations. You can save your business from not just reputational damage but also from extra costs. By using the industry’s best practices and continuously updating and improving the AML watchlist screening practices businesses can deal with the changing risks and threats before they become bigger problems and get out of hand. With the help of global watchlist screening, they can protect themselves from being linked to any financial crime. And keep up with the integrity of the financial system.

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