While there has been a noticeable compliance push to meet the sanctions requirements, there is still room for improvement, particularly when it comes to validating screening systems and rejecting funds.
Sanctions compliance remains difficult as respondents rank customer screening the most difficult challenge. Respondents have identified the poor quality and lack of customer information as the most challenging aspects of customer screening.
More than 70 percent of respondents find sanction screening systems effective in their organizations; however, only 42 percent of respondents test their screening systems for effectiveness at the implementation stage. The financial institutions in North America and Western Europe report the highest levels of satisfaction with regards to their screening systems, perhaps reflecting more developed sanctions screening systems and the further matured nature of sanctions compliance in the regions. Further, in North America, almost 60 percent of respondents indicated testing the effectiveness of their screening at least on an annual basis. In the long-term, regulators are not likely to accept one-off effectiveness checks and expect ongoing assurance programs on all aspects of a firm’s program. System effectiveness is one of the harder areas to test, with firms increasingly using dummy data to check the end result is as expected.