AML name screening is the process of comparing the names of individuals, organizations, and countries against lists of individuals, organizations, and countries that are subject to economic and financial sanctions, as well as other lists of individuals and organizations that may pose a risk of money laundering, terrorist financing, or other illicit activities. This is an important step for performing Know Your Customer (KYC) checks when onboarding and monitoring customers.
Name screening is a critical tool that financial institutions and other regulated entities use to comply with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. Businesses should use AML screening software to screen the names of their customers, clients, and other parties involved in financial transactions against relevant lists in order to identify and mitigate the risks of money laundering and terrorist financing.
There are several types of lists that financial institutions and other regulated entities may use for name screening purposes, including:
Sanction lists: These lists include individuals, organizations, and countries that are subject to economic and financial sanctions imposed by governments, international organizations, or other bodies. Sanction lists are used to restrict or prohibit certain financial transactions and other activities in order to achieve a variety of objectives, including combating terrorism, promoting human rights, and addressing security concerns. Name screeing is often done against international sanction lists such as the United Nations lists (UN) and Specially Designated Nationals and Blocked Persons list (SDN) by the Office of Foreign Assets Control (OFAC).
Politically exposed person (PEP) lists: These lists include individuals who hold or have held a prominent public position, such as a head of state, senior government official, or high-ranking political party official. PEPs are considered to be at a higher risk for involvement in money laundering and other financial crimes due to their access to power and influence. Financial institutions and other regulated entities are required to conduct enhanced due diligence on PEPs and their immediate family members and close associates.
Watch lists: These lists include individuals and organizations that may pose a risk of money laundering, terrorist financing, or other illicit activities. Financial institutions and other regulated entities are required to report any transactions or activities that may be related to individuals or organizations on these lists to the appropriate financial intelligence unit (FIU). One example is the Investor Alert List published by the Monetary Authority of Singapore (MAS), which providers a list of individuals and companies that may or may have been wrongly perceived as being licensed or regulated by MAS.
In addition to name screening, financial institutions and other regulated entities are also required to implement other measures to detect and prevent money laundering and terrorist financing, such as customer due diligence (CDD) and suspicious activity reporting (SAR). CDD is a process that involves obtaining information about customers, including their identity and financial activity, in order to assess the risks associated with doing business with them. SARs are reports that are filed with financial intelligence units (FIUs) when a financial institution or other regulated entity suspects or has reason to suspect that a transaction or activity may be related to money laundering or terrorist financing.
Overall, the purpose of name screening is to help financial institutions and other regulated entities identify and mitigate the risks of money laundering and terrorist financing. By screening the names of their customers, clients, and other parties involved in financial transactions against relevant lists, these entities can protect the integrity of the financial system and ensure compliance with AML and CTF regulations.
Automate Your AML Name Screening
The name screening process is not a one-time event, but rather an ongoing process that involves continuous monitoring and risk assessment. Financial institutions and other regulated entities are required to perform name screening on a regular basis to ensure that it remains accurate and up-to-date. This is often an intensive process for most companies.
Fortunately, there are tools available to help companies comply with regulatory requirements while automating the entire process. OneHypernet's all-in-one compliance solution has a robust case management system with ongoing monitoring, screened against a comprehensive database of global sanctions and watchlists data. For more information, book a demo with one of our experts today.