4 Important Characteristics of a Fool-Proof Customer Screening Process


Some people envision financial crime to be a phenomenon straight out of the movies, in which enigmatic hacker personalities execute outlandish schemes to cripple a bank’s operations. But in reality, crimes like money laundering, fraud, and terrorist financing have a much more subtle and average-looking face. They are usually initiated through low-key methods precisely so that malicious agents can escape detection from banking staff.

The best weapon that a bank can wield against financial criminals is a reliable customer screening system. Ideally, this system is meant to collect customer data and score individual customers according to the risk that they may present to the organization. Unfortunately, too many banks still deploy outdated and redundant customer screening protocols that make it all too easy for bad actors to slip through the cracks. If the screening process can’t produce accurate warning signs of illicit activity, then a bank may only discover the problem when it’s too late.

As someone responsible for your own bank’s customer due diligence (CDD), it’s urgent that you improve your customer screening process to hold up both in the legislative and regulatory sense. A good customer screening process will shield you against the evolving threat of financial crime while keeping you in the good graces of anti-money laundering (AML) regulators.

Below are four important characteristics that your system should possess to be both viable against financial crime and compliant with regulatory requirements.

An Ability to Identify the Highest Risks

First, you should envision a good customer screening process as one that compartmentalizes true risk from potential false positives. Your customer screening process can only be judged effective if it can properly identify the biggest threats to the organization, as these are the ones that merit immediate action.

Aim to retool your AML investigations and point them toward cases of note, thereby making the process more efficient and better aligned with screening standards from regulators. Proper focus on high-risk scenarios will save your bank a significant amount of money on AML, and it will make your compliance staff better at defending your system from bad actors.

Topnotch Data Preparation and Data Standardization Capabilities

Another thing that banks should understand about their customer screening process is the importance of a solid data foundation. Deficiencies in data can result in more inaccuracies during matching, therefore increasing your bank’s risk of being on the receiving end of financial crime.

Today’s banks often face the problem of data pollution, or being inundated with inconsistent, incomplete, or invalid data. This impedes compliance officers’ ability to conduct timely and accurate analysis on potential cases of alarm, essentially buying time for the perpetrators.

A trustworthy customer screening process will empower staff to sift through large volumes of data and make sense of all the details. The process should also allow staff to efficiently profile, sort, and audit data from different sources, such as watchlists published in foreign languages and using foreign characters. On top of reliable data preparation methods, the customer screening system should also incorporate executable data standardization processes. Compliance staff should be able to implement these quickly and thoroughly without needing additional help from the bank’s IT support.

Overall, the principle is to come up with clean and workable data that’s easy to analyze and use as the basis of investigation. If your bank’s data preparation and data standardization protocols yield a robust data foundation for customer screening, you’ll be better equipped to spot anomalies in your customer enrollment.

Smart Form Design and Advanced Data and Field Matching Procedures

Banks should also be aware of additional complexities that lie with customer screening forms and their CDD data and field matching procedures. The current system may not be able to pick up on nuances like misspelled names or overfilled name data. The system may also lack a way to initiate separate customer screening processes for joint accounts that involve multiple names.

To address these issues, the bank must ensure that these complexities are addressed. It must also design customer screening forms that will make data compilation and analysis neater and more accurate. A customer screening process that can handle these granular-level issues will be of good protection in complex cases.

An Organized and Fully Integrated Case Management System

Lastly, your customer screening system should boast case management faculties that are fully integrated with the bank’s AML ecosystem from end to end. You and your staff should have 360-degree visibility of all cases, and all of the case details should be assumed accurate and up-to-date.

Excellent case management will streamline the work of investigators and help them properly review, audit, and resolve cases that are worthy of attention. Your case management system should also enable you to file timely Suspicious Activity Reports (SARs) to your regulators, like those from the Financial Crimes Enforcement Network or FinCEN.

Key Takeaways

In summary, your updated customer screening program should be capable of the following:

  • Clear insight on each customer’s risk levels
  • Granular data preparation, standardization, and analysis
  • Advanced-level data and field matching
  • Responsive, complete, and timely case management

If all four of these features are present, your bank will be able to graduate from a slow and piecemeal approach of tagging individual false positives and false negatives. Your eyes will also be opened to evolving patterns in financial crime that would otherwise go unseen by your CDD protocols. Consider upgrading your current AML tech stack to fortify your current customer screening process, and give your bank a fighting chance against even its subtlest and most well-hidden enemies.


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