Failure to comply could result in punitive fines, loss of organisational reputation, and even legal action from the authorities should sanctions be broken.

But sanctions compliance is only one area of risk that needs to be addressed.

Anti-money laundering (AML) policies, effective know your customer (KYC) onboarding, and third-party risk management should all be underpinned by data that must also include politically exposed persons (PEPs), counter financing of terrorism (CTF) watch lists, corporate data, and adverse media.

Why the data source is so crucial to AML screening

Any AML screening solution is only as good as the underlying data that serves to power the processes designed to protect your business from risk.

It must consist of quality data that is structured, extensible, and timely, with a market-leading quantity of secondary-level identifiers to help reduce false positives and save both time and money during client and third-party screening.

Not surprisingly, every AML screening provider will claim that their data is up to the mark, yet many fall short of the standards required to ensure your organisation is fully compliant at all times.

With this in mind, when considering partnering with an AML screening provider, there are a number of key questions you should ask in order to guarantee that the data they employ delivers all safeguards you seek.

1. Is the data employed of sufficient quality to provide you with the assurance you demand? 

Data quality is of paramount importance as it forms the bedrock of any screening solution. To help you ascertain the true quality of the data, delve deeper and ask the following:

• Is your AML data covered by the four main principles of accuracy, completeness, validity, and timeliness? 
• Are the sources for PEPs, sanctions, and watch-Lists sourced by global teams across multiple languages? 
• Does the data include information on people who are reported to have been formally accused, arrested, or convicted of crimes including financial crime and terrorism? 

 2. Is the data independently audited to ensure consistent quality?  

The only way to fully ascertain if the data provided is always of the highest quality is through regular scrutiny, both internally, and through independent third parties. Three further questions will help you uncover the truth behind the data being utilised: 

• Has the data provider passed an ISAE3000 review as part of its data quality assurance mechanisms which are audited and accredited to international standards? 
• Is the data reviewed by a Big 4 accountancy firm to ensure that data quality is consistently high, and that all processes and controls are in place to maintain high standards? 
• Is the data subject to a quality-monitoring programme involving regular internal audits of data for each category to ensure the information is accurate, consistent, complete and current? 

3. Is the data update process audited and certified? 

Regular and consistent auditing and certification are the guarantees that the data is always accurate and timely. This relies upon a number of quality checks and processes which any AML screening partner must be able to demonstrate that they have in place: 

• Is the data regularly checked by an independent quality assurance team, which includes the four-eyes principle to ensure data accuracy? 
• Is the data updated every 24 hours at the very minimum? 
• As well as monitoring regular data output to ensure accuracy, consistency, and completeness, are gap checks and additional ad-hoc quality checks conducted at regular intervals? 

 4. Can you rely on the sanctions data being both comprehensive and up to date? 

While there is an automatic assumption that the data provided fully covers every area and is always up to date, questions need to be raised about exactly how these are measured. The only way to ascertain the validity of any claims is to receive affirmative answers to the following: 

• Does the sanctions data provider update its datafiles with new profiles within 24 hours of new sanctions measures being issued? 
• Are there dedicated sanctions teams monitoring all major global sanctions lists on a 24/7/365 basis, including narrative sanctions (sanctions ownership information)? 
• Does the data include companies sanctioned by the Office of Foreign Assets Control (OFAC) and EU Sanction programmes which include those who own a minimum 10% stake of a company or where an explicitly named sanctioned individual has a possible controlling interest? 

 5. Can you depend on the PEPs data coverage being accurate? 

Since the release of the Pandora Papers, monitoring Politically Exposed Persons (PEPs) must play an increasingly important role in mitigating risk. Many AML screening providers have yet to realise this and as a result are not screening PEPs risk with the diligence it deserves, so it’s essential that you question their commitment to monitoring PEPs. 

• Does the data include those on senior ranking public officials, including government officials, politicians and their relatives or close associates (RCAs)? 
• Does the PEP data include job categories whose definitions are based on Financial Action Taskforce (FATF) recommendations?

6. How comprehensive is the adverse media coverage? 

Adverse media screening is a critical element of any enhanced due diligence programme. Yet the process of uncovering a party’s potential involvement in alleged criminal activity is often one of the more overlooked aspects of the screening process. The following questions will help you to ascertain an AML’s screening provider’s commitment to this area: 

• Does the adverse media coverage include both structured and unstructured data? 
• Does the data include adverse media profiles that are enriched by sources including government and other official websites? 
• Are the media sources reputable and credible according to set guidelines? If allegations are media-based, are they then verified against alternate sources? 

7. What is the quality and quantity of corporate (KYB) data? 

Verifying an organisation’s attributes, ownership, and associated identifiable information is a vital element of any screening programme. But many AML screening providers fail to offer a fully comprehensive solution and as a result leave gaps that can leave your organisation open to risk. With this in mind, ensure that any provider is able to confirm all of the following questions: 

• Do the sources include data and documents from both government and commercial registers, financial authorities, and tax offices from around the world? 
• Does the company data include structured data sets; full indexing of company names and Tax ID & IBAN verification? 
• Does the data originate straight from government sources, rather than third party resellers, with full data provenance? 
• Does the data include unstructured content from higher-risk countries? 
• Does the data include intelligence on both individuals, companies, business relationships and ultimate beneficial ownership data? 

RiskScreen has the answers

RiskScreen has worked hard to find the very best data providers from across the world, to ensure you always get screening matches you can trust. 

RiskScreen is one of the few AML screening providers that can offer a choice between Dow Jones and Refinitiv World-Check sanctions, PEP and Watch List data, both of which are unparalleled in their quality and scope. 

For all know your business (KYB) screening and onboarding we employ data from both kompany and Sayari, which provide complementary coverage of corporate entities from around the world and are crucial for investigating ultimate beneficial owners (UBO). 

Finally, while checks against AML data sets and corporate registry information are vital for regulatory compliance, checks against adverse media coverage are becoming increasingly important to protect your organisational reputation.