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Sanctions, Financial Crime and Straight Through Processing: Plugging the Gaps

In the fast-paced world of modern banking, seamless, efficient, and compliant transaction processing is now a requirement to operate effectively, particularly when it comes to meeting regulatory compliance requirements. Over the last few decades, Straight Through Processing (STP) has emerged as a game-changer, allowing banks to automate end-to-end transaction processing without manual intervention. 

Sanctions can pose a particular challenge when it comes to effective straight through processing, and requires a careful examination of how transaction automation is managed within an organisation. AI and intelligent automation can help bridge the technology gaps to ensure effective straight through processing while maintaining regulatory compliance – and here are the key points to keep in mind.

Payments exceptions solutions 

Global geopolitical shifts have spurred a surge in economic sanctions in recent times, targeting transactions tied to unlawful actions like terrorism, drug trade, and human rights abuses. Financial institutions bear the responsibility of enforcing these sanctions, and have faced a substantial increase in cases to manage. Today, complex investigations are carried out via email, phone, and other channels, and often stray from the bank's central platform, without an effective workflow and automation built around them. This can draw out resolution times and amplify manual mistakes, complicating compliance tracking in the process.

The key to managing these challenges effectively lies in investments in automation-powered payments exceptions solutions. Managing a significant proportion of information requests is typically a significant burden when it comes to financial sanctions investigations. Automating the process by using tools that communicate end-to-end using Swift messaging standards can help payments exceptions teams achieve faster resolutions with fewer manual errors, resulting in increased compliance by keeping process and data gathering in the same place. You can also increase the level of transparency between bank and client through improved communications, and on the banks’ side easily track and escalate. This can reduce the friction between client, sales and service operational teams and lead to vastly improved service levels.

AI-driven screening and case management

One of the biggest challenges in sanctions compliance is the need to accurately screen a high volume of transactions against constantly evolving sanctions lists. Today, automated solutions for screening sanctions can rapidly analyse vast datasets and compare transaction details against official sanctions lists issued by regulatory bodies. By automating this process, banks can significantly accelerate transaction screening while minimising the risk of false positives or negatives.

Such screening solutions can subsequently be built on by effectively connecting fraud and sanctions screening tools to case management and guided processing solutions. Case management helps orchestrate all the data, documents, tasks, and processes needed to investigate sanctions. By centralising this collateral within a single source of truth, banks can more effectively comply with regulatory requirements while reducing operating expenses by up to 40%. This enables banks to free up staff for high value, judgment-based work where manual intervention is required, streamlining efficiencies within the organisation.

A unified approach towards sanctions and financial crime

Over the past few decades, constantly shifting risk trends and technology have shaped financial crime detection systems. Traditionally, complex rule engines were developed and deployed for financial crime detection and in recent years, financial firms have expanded AI and machine learning for effective financial crime alert management. 

This has yielded notable benefits like reduced false positives, enhanced risk detection, and increased automation at scale. However, challenges such as joining up newer fintech and legacy detection investments, operationalising detection and identification across financial crime teams, as well as a reduction in manual activities while juggling the aforementioned challenges still remain. 

The key lies in joining up the detection output from numerous systems and inputs into a unified workflow and case management system. By doing so, banks are able to achieve holistic oversight with aggregation and scoring of alerts from multiple detection systems, as well as increased productivity and accuracy with skills based routing through reducing the emphasis on manual activities to only that which truly requires human oversight.

Leading banks have now realised that a unified approach to workflow automation and building in intelligence to the process, allows them to streamline back-end systems to achieve operational efficiency and fulfil regulatory requirements. Making these investments now will enable organisations to set themselves for success in the future, and to protect themselves against regulatory infractions.

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