Introduction to Sanctions Screening
Before diving into the list (for readers unfamiliar with the sanctions screening process), we recommend reading sanctions.io's Ultimate Sanctions Screening Guide: Everything You Need to Know.
In the article, you can get answers to the following questions:
- Why is sanctions screening important?
- What are sanctions lists & sanctions databases?
- How does sanctions screening work?
- What are sanctions screening best practices?
With that said, we will now reveal the top mistakes to avoid when selecting a sanctions screening service.
Number 1: Failing to consider your specific sanctions compliance requirements
No one enjoys that sinking feeling of signing a contract for a service to realize later that it cannot deliver what you need.
But companies seeking a sanctions screening partner need to watch out - because this is what can happen when selecting one.
But how so?
Similar to how online streaming services like Netflix and Amazon Prime Video don't offer identical products, neither do sanctions screening services. And it's important to remember the following: All businesses and organizations (especially from the financial sector) must clearly understand their specific sanctions compliance obligations.
Before signing any sanctions screening contract, the following questions must have concrete answers:
- What are the sanctions compliance requirements for your operational jurisdictions?
- What are the sanctions compliance requirements for the industries and sectors you operate?
- Which countries do your customers come from?
- Do they also come from high-risk money laundering territories?
- Can a sanctions screening provider (you have identified) cover everything you need?
If you are from a financial services business, you will likely already have a sanctions screening strategy as part of your compliance framework and know your requirements.
And for most other companies, for example, start-ups and SMEs new to sanctions screening, the following will be welcoming news: With the incredible advancements in regulation technology (RegTech), services that will provide everything you need now exist that are easy and fast to set up.
For example, sanctions.io's comprehensive starter package covers all four major global sanctions lists plus lists from countries such as Australia, Canada, Switzerland, France, the UAE, and many more).
Number 2: Getting stuck with a poor sanctions screening technology partner
And back to that sinking feeling mentioned earlier. Because another mistake to avoid when choosing a sanctions screening service is settling for a provider without solid and reliable tech.
Here are some of the problems you may encounter:
- Higher false positives rate
- Poor integration
- Increased downtime
Let's expand on all these issues:
Higher False Positives Rate
In a nutshell, in the context of sanctions screening, higher false positives mean an increased rate of matches (that turn out to be false). And why is this a problem? Because it means compliance teams spend more resources and money manually investigating 'matches' that were, in the end - false.
Make sure to choose a sanctions screening provider that is proactively managing this issue. For example, sanctions.io's industry-leading AI-based name-matching technology helps to reduce false positives significantly.
Recommended reading from the blog - Reducing False Positives in Sanctions Screening: Crucial Things to Know
Today, almost all sanctions screening services will integrate into your company's systems through an application programming interface (API). And similar to how a poorly-rated Android app (that uses an API to connect to your social media accounts) is full of bugs, so can sanctions screening APIs. Before signing on the dotted line, test how a provider's technology platform integrates with your system (for example, in a free-trial period).
sanctions.io offers a highly reliable, ultra-fast and user-friendly API (RESTful API with ~200ms response time) that's easy to integrate using pre-built connectors and Apps for SAP®, BigID®, or API3® Airnode.
One of the biggest concerns for companies, especially those that require transaction screening, is downtime. Why? Because for many companies, especially those with customers signing up and performing transactions online, a seamless and fast experience is a top priority. So it's a no-brainer to partner with a sanctions screening service that supports (not hinders) your compliance and AML goals.
And the minimum you should accept is this: a service that offers enterprise-grade uptime. For example, sanctions.io offers an uptime of more than 99.99% (guaranteed in the service level agreement).
Number 3: Ignoring the importance of data quality
The next pitfall to avoid when selecting a sanctions screening service is choosing a provider with poor data quality. But before we expand on this point, it's important to remember the difference between the following:
- The breadth of sanctions data
- The quality of sanctions data
In the next section, we discuss the breadth of data (referring to the number of sanctions lists included in any package).
Data quality, on the other hand, is the accuracy and reliability of the information - something that best-in-class sanctions screening companies will prioritize as a cornerstone offering in their service.
And why should they do this? Because poor data quality can have severe consequences for businesses, such as increases in false positives or, even worse: false negatives. A false negative is when a sanctioned individual or entity slips through the cracks because the sanctions screening system fails to red-flag them.
It's essential to ask a potential sanctions screening partner how often their databases update.
Because in the fast-moving world of sanctions lists, data changes - fast. And remember the following: Daily updates are inadequate. Selecting a provider with hourly updates - such as sanctions.io - is highly recommended to ensure sanctions compliance 24/7.
Number 4: Failing to assess scalability and future needs
The final mistake to avoid when choosing a sanctions screening service is selecting a partner that can't grow with your expanding business. All organization's needs evolve, so selecting a provider that can accommodate future growth and changing compliance requirements is crucial.
And failing to consider scalability can lead to costly and time-consuming migration to a different service in the future.
Before making your final decision, it's essential to understand the service provider's ability to scale with your organization and accommodate increased transaction volumes, as well as the option to create custom screening lists on demand.
Because the reality is this: Not all sanctions screening services with sanctions databases are made equal.
But all providers worth their salt will offer a comprehensive global sanctions lists screening service as part of a standard package - and go beyond that. For example, sanctions.io's small package (starter) covers 30+ global sanctions lists, plus global PEP and criminal watchlist data. Custom screening lists are available on the medium package and upwards.
Sanction checks services should also have the technology to scale with you and offer enterprise-level, large-volume transactional screening capabilities (such as sanctions.io).
How sanctions.io Solves Your Sanctions Screening Requirements
To learn more about how our sanctions, PEP, and criminal watchlist screening service works and to receive answers to all your queries regarding the sanctions.io API, integrations, and more. Book a free Discovery Call now.
7-Day Free Trial (No Credit Card Required)
We offer a free 7-day trial (no credit card is required) and will be delighted to walk you through our service. sanctions.io is a highly reliable and cost-effective solution for sanction checking. AI-powered and with an enterprise-grade API with 99.99% uptime are reasons why customers globally trust us with their sanctions screening needs.