Will outsourcing the sanctions screening process work?
Outsourcing the sanctions screening process relieves a major operational burden off FIs, but security issues, central bank approval and integration of systems need to be addressed. August 14, 2012 | Levina LimThe burden of compliance and the consequent need for sanctions screening and monitoring has always been a frustration to all financial institutions (FIs) conducting monetary transactions for their clients on a day-to-day basis. The burden grows with each discovery of a fowl-up by those who are expected to abide by the rules, but don’t – whether by acts of wilful design or by unbeknownst but fatal flaws; a Standard Chartered Bank or a HSBC. As sure as death and taxes, regulatory compliance is a necessary evil not set to be done away with anytime soon. FIs must ensure robust sanctions screening infrastructure and procedures are effectively in place to meet sanctions and compliance regulations imposed by international bodies and countries around the world. As a result of impositions of trade and economic sanctions, SMEs, corporates and financial institutions alike are required by law to deny all trade and financial transactions involving sanctioned parties. Most commonly, US and UN sanctions on Iran and Syria, general suspects of money laundering and terrorism as well as individuals and organisations associated with them. Details of sanctioned individuals and organisations are on the various sanctions lists (UN, HMT, OFAC, etc), which are regularly updated in reflection of the tumultuous events occurring on the international scene. With the sharp attention that the world is placing on sanctions compliance, it is painfully clear to FIs the negative repercussions that failure to comply with regulations will cause – finger pointing, buck passing, high-level resignations and steep financial penalties. Most recently, HSBC was ordered to set aside a sum of £445m ($698m) in expectation of fines and penalties to be levelled against it for breaching safeguards that should have been in place to stop the laundering of money from Mexico, Iran and Syria. In June 2012, Dutch bank ING was slapped with $619m worth of fines for ignoring US sanctions on Iran and ... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Payments, Transaction BankingPayments,Transaction Banking, Payments,Transaction Banking, Keywords:Sanctions Screening, AML, SWIFT Sanctions screening, AML, SWIFT
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