How to Evaluate a New AML/KYC Screening System

Your AML Software is the Gatekeeper to Staying Compliant — Don’t Let it Fall Short 

Compliance software is constantly changing and adapting to stricter and more complex rules and regulations each year. In order for your company to stay compliant and ahead of the game, you need a screening system that can not only meet your screening and monitoring needs of today – but of the future as well. Whether you are assessing how well your current AML screening software can support your organization’s growing needs or you are evaluating more advanced technology in the marketplace, there are some important criteria you should be aware of. In this article, we’ll examine some key points you need to know about AML screening software and your vendor relationship.

How to Evaluate Your Current AML Screening Software

AML software must continually adapt to new regulatory measures imposed by governments across the globe. The increasing demand by customers for digitalization adds an additional layer of complexity, as well as increased risk. Having a good screening system and efficient processes to support the specific needs of compliance departments is of the utmost importance to ensure proper oversight of the customers onboarded and thousands of transactions institutions make daily.

The key is to put in place a system and process that can support your growing needs more efficiently.

In order to determine whether your current AML screening software is sufficient or if you are in need of new technology, you should start with an evaluation of your current application. This is best done by breaking it down into four “pain points” that examine how well your AML software meets your needs, and where it falls short.

  • Pain Point 1 – False Positives. Most compliance professionals say that false positives are their biggest problem. Dealing with them takes up valuable time that could be spent more productively. The two main causes of false positives are quality issues within the data and lack of sophistication in the matching technology.
  • Pain Point 2 – Manual Processes. Manual processes are time consuming and create bottlenecks in workflow. It’s a good idea to monitor what your compliance team is still required to do manually and ask why your current AML software is not able to accomplish these tasks in an automated way.
  • Pain Point 3 – Risk and Coverage. This is closely tied with Pain Point 1, and it relates to how well your AML software is able to screen against sanctions and PEP lists or adverse media, whether they are government issued lists or commercial high risk databases. A solid AML screening solution will allow you to apply different rules based on the risk type and can “slice and dice” the sanctions and PEP data according to different categories of risk or relevance to your screening needs.
  • Pain Point 4 – Reporting. Companies are constantly required to report the results of, or provide updates on, compliance screening to senior management, the board, auditors, and regulators. You should be able to consistently rely on the accuracy and completeness of the reports from your AML software. They should be customizable to the auditors’ or regulators’ requests, and they should be easy to extract.

How to Evaluate a New AML Screening Solution

Planning – Migration Methodology Best Practice

Your vendor should provide a Migration Plan that lays out each stage of migration*:

The migration from one system to the other is also something to consider, and firms should make sure the new AML software vendor offers a proven migration plan, as well as support, flexibility, and training.

The Basics

Once you have evaluated how well your current solution covers these basics, you may decide to look at other solutions to help you better meet your compliance obligations. So what is the best way forward when your company is considering a change in software? In today’s regulatory environment, an advanced screening solution with sophisticated technology and reporting capabilities is a must to keep pace with the demands of complex regulations and managing the organization’s exposure to risk. The following criteria should be evaluated when choosing an AML screening solution:

  • Accuracy
  • Workflow and Efficiency
  • Automation and Batch Processing
  • Migration Methodology
  • Performance and Scalability
  • Training
  • Integration with Compliance Lists

This is a good list of broad factors to consider, and any AML screening software should be able to function appropriately in each of these categories. Depending on the size and scope of your compliance program, cost will vary accordingly. The migration from one system to the other is also something to consider, and firms should make sure the new AML software vendor offers a proven migration plan, as well as support, flexibility, and training. Click here for a complete checklist of factors to consider when evaluating AML screening software.

The effectiveness of your AML software is of vital importance to you and your company. It should make screening easier and more automated, and help keep your company in compliance with AML regulations. Contact us to learn how FinScan can help improve compliance efficiency in your organization.