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How to build an effective payments screening programme

Payment screening is imperative to any organisation to ensure compliance with international sanctions and anti-money laundering (AML) regulations while protecting the financial system’s integrity.

  1. Discover how organisations can implement best practices to identify, mitigate and manage any potential risks that may be present.
  2. Identify ways to improve your payment screening programme, by leveraging trusted data and advanced tools.

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Payment screening is the process of reviewing and verifying payment transactions to ensure that they are legitimate and comply with regulatory requirements. Payment screening is typically performed by financial institutions, payment processors, and other organisations involved in the payment process and helps to ensure compliance with international sanctions and anti-money laundering (AML) regulations while protecting the financial system’s integrity. By identifying and blocking transactions involving sanctioned individuals, entities, or countries, financial institutions can prevent the flow of funds used to finance terrorism or other illicit activities.

Payment screening is conducted using various methods and tools, depending on the organisation and the type of payment being processed. Due to the critical nature of the payments process, it is imperative that the payment screening policies process is designed with caution and following best practices:

Designing your payment screening process

1. Assessing your institution’s risk profile

This involves evaluating the types of products and services you offer, the geographic locations in which you operate, and the nature of your customer base. By understanding your institution’s specific risks, you can tailor your payment screening process to address these risks more effectively.

2. Establishing clear policies and procedures

These policies should outline the steps to be taken when a potential match is identified, including:

  • Escalation procedures: Define the process for escalating potential matches to the appropriate decision-makers within your organisation.
  • Investigation procedures: Outline the steps to be taken to verify the accuracy of a potential match and gather additional information, if necessary.
  • Decision-making procedures: Determine the criteria for determining whether a transaction should be blocked, rejected, or allowed to proceed and who is responsible for making these decisions.

3. Selecting an appropriate screening solution

This tool should be capable of screening transactions against multiple sanctions lists and other relevant databases and providing automated alerts for potential matches. When selecting a screening tool, consider its accuracy, speed, ease of integration with your existing systems, and the vendor’s level of support.

4. Implementing a risk-based approach

A practical payment screening process should be tailored to the risks associated with your financial institution’s products, services, and customer base. This means implementing a risk-based approach that adjusts thresholds and the level of scrutiny applied to transactions based on factors such as Jurisdiction, Customer and Product risk.

5. Training and awareness

It is vital to provide regular training and raise awareness among staff, by educating employees about the importance of payment screening, its implications, and their role in the process.

6. Ongoing monitoring and review

This involves conducting regular audits to ensure compliance with regulations, updating policies and procedures as needed, and staying informed about changes to sanctions lists and other relevant databases.

Choosing the right technology – evaluating payment screening solutions

As part of designing an effective payment screening program, organisations often also rely on third party technology solutions to provide the screening capabilities.

Before evaluating payment screening solutions, you must clearly understand your financial institution’s needs and requirements. By identifying your specific needs, you can better focus your search on solutions that align with your institution’s requirements.

When assessing payment screening tools, consider the following key features:

  • Accuracy: The solution should accurately identify potential matches while minimising false positives and negatives.
  • Speed: The screening process should be fast and efficient, minimising the impact on transaction processing times.
  • Integration: The solution should be easily integrated into your existing systems and workflows.
  • Flexibility: The solution should be customisable to your institution’s specific needs, including the ability to adjust risk-based screening parameters.
  • Scalability: The solution should be capable of handling your institution’s current transaction volumes and be able to scale as your business grows.
  • Compliance: The solution should facilitate compliance with relevant regulations, including generating reports and maintaining an audit trail.
  • Support: The vendor should provide ongoing support, including regular updates to sanctions lists and other relevant databases and technical assistance.

Before finalising your decision, testing and evaluating the payment screening tool in your environment is crucial. This will help you assess the solution’s accuracy, speed, ease of integration, and overall suitability for your institution’s needs.

Choosing the right technology for your payment screening programme is critical in ensuring its effectiveness and efficiency. By carefully evaluating your needs and requirements, considering the critical features of payment screening tools, assessing vendor capabilities, and testing the solution in your environment, you can select the best tool to meet your institution’s specific needs and safeguard against financial crime.

Navigating regulatory compliance

A robust payment screening process is essential to protect your financial institution against financial crime and comply with international sanctions and anti-money laundering (AML) requirements.

A risk-based approach is central to ensuring regulatory compliance in your payment screening programme. By tailoring your screening process to the specific risks associated with your financial institution’s products, services, and customer base, you can effectively target the areas of most significant concern and allocate resources accordingly. This approach should be documented in your institution’s AML and sanctions compliance policies, outlining how risk factors are identified, assessed, and mitigated.

Compliance with sanctions and AML regulations often requires financial institutions to maintain records of payment screening activities and submit reports to relevant authorities. Ensure that your payment screening solution can generate and maintain the necessary records and reports to facilitate compliance with these requirements.

Navigating regulatory compliance is critical to building an effective payment screening programme. By understanding the regulatory landscape, implementing a risk-based approach, regularly updating sanctions lists and databases, maintaining records and reports, and providing employee training and awareness, your financial institution can ensure compliance with international sanctions and AML requirements while protecting itself from the risks associated with financial crime.

Maintaining and enhancing your payment screening programme is an ongoing process that requires continuous improvement, staying informed on regulatory changes and industry developments, adopting a proactive mindset, leveraging technology and automation, and investing in employee training and development. By implementing these strategies and best practices, your financial institution can ensure its payment screening programme’s continued effectiveness and efficiency, safeguarding against financial crime and ensuring compliance with international sanctions and AML requirements.



What is payment screening?

Payment screening is the process of reviewing and verifying payment transactions to ensure that they are legitimate and comply with regulatory requirements.