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Wednesday, June 19, 2024

Why should banks screen watchlists on real time basis

How Regulatory Compliance Benefits The Financial Industry?

In the world of business, trust is everything. In today’s stringent compliance regulations, it is the bedrock of a successful business. Trusted firms tend to have higher market value, better profitability, positive customer reviews, lower employer turnover, higher revenue and more loyal customer base. Especially the businesses that involve B2B and third-party relationships, building trustful business relationships is paramount. Embracing Sanctions watchlists Screening measures is another way to build your business credibility. 

How Regulatory Compliance Protects Financial Firms?

In the world of finance, there is one principle that financial firms must keep in mind, which is that firms conducting business relationships with a client involved in criminal activity could eventually cost the financial firm itself. As the previous fraud cases have shown us time and again, finance corporations may end up paying the price of the unlawful acts of their clients. Financial firms are held accountable by the law enforcement agencies, regulatory bodies, and government organizations for conducting business relationships with their criminal clients. Therefore, the financial firms must screen their customers before providing any financial services to fulfill their Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.  

For that, the compliance departments in the financial firms can employ AML watchlist solutions to conduct watchlist screening of their potential clients as well as existing customers. In the world of finance, compliance ensures justice, fair business dealings and prevents financial crimes. Compliance is the bedrock upon which the foundation of a successful business is built. 

Who Composes Watchlists Around the World?

Crime watchlists and sanction watchlists are usually released by the governmental organizations with the collaboration of law enforcement agencies and regulatory authorities from around the world. It reveals names, background details and complete essentia profiles of targeted individuals involved in crimes. Global watchlists from organizations like the United Nations can put an entire country on a sanction list as in the case of Iran, and North Korea. Usually individuals, businesses or groups like ISIS, Al-Qaeda etc are sanctioned and added to global watchlists. 

These watchlists are usually composed to restrict criminal entities from accessing legitimate financial systems and continue their criminal activities. Letting the financial criminals use the international monetary system threatens the national security and credibility of the legitimate monetary system. 

Watchlist Data Released By Organizations Across the Globe

  • Terrorist List released by the State Financial Monitoring Service of Ukraine (also known as SDFM)
  • Politically Exposed Persons (PEP) Lists released and updated by the United State’s Central Intelligence Unit (CIA).
  • Politically Exposed Person (PEP) list containing the names of all the heads of government and heads of states. 
  • List of Politically Exposed persons released by the Parliamentary Assembly of the Council of Europe (CoE Assembly).
  • The international Sanction Lists released and updated by the United Nations (UN).
  • Sanctions Lists released by the US governments in line with U.S foreign policy.  
  •  List of Specially Designated Nationals (SDN) released and updated by United state’s Office of Foreign Assets Control (OFAC).
  • Watchlist data released by the Canadian Office of the Superintendent of Financial Institutions.
  • AECA Debarred List released by the United State’s Department of State
  • List of financial sanctions released by the European Union.
  • Banned List released and updated by the Capital Market Board Of Turkey Operation.
  • Consolidated List released by the government of Switzerland 
  • World’s Most Wanted List released and updated by the International Criminal Police Organization (Interpol).
  • Terror List released and updated by the Turkish government.
  • The financial sanctions list released and updated by the government of UK (HMT).
  • Sanctions list released and updated by the Australian government.
  • Consolidated list released and updated by the European External Action Service (EEAS).
  • Consolidated sanctions list released and updated by the Kyrgyz Republic.
  • Sanctions list released by the African Union and Economic Community of West African States (ECOWAS)

Staying compliant with regulatory guidelines implies meeting the financial reporting standards, following the accounting principles, and abiding by the tax regulations. Financial firms stay vigilant in crafting financial statements in compliance with applicable standards and diligently update reliable financial records, and meet all the tax regulations including paying the national taxes and timely filing the government tax returns. Following the financial regulatory guideline not just benefits the financial ecosystem but it also benefits the firm itself by enhancing its market credibility. Watchlist Screening and Filtering benefits all the actors involved by enhancing the transparency of the financial institutions, accountability of businesses and integrity of the international financial system. 

Compliance with watchlist and sanctions intelligence also helps curb the rising financial crimes like money laundering, tax evasion, terrorist financing, corporate frauds, embezzlement of public funds, securities frauds, bribery, corruption and beyond. They say ‘Prevention is better than cure’, in the world of regulatory compliance, compliance is that ‘prevention’ that helps all the stakeholders involved. 

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