The Financial Services Authority has called on financial services institutions to keep their data more up-to-date, clean and accurate and to adopt sophisticated fuzzy-matching algorithms for sanctions screening. Its Financial Crime and Intelligence Division has issued the recommendations in its report, “Financial services firms’ approach to UK sactions”.
Key issues identified are the need to ensure that customer data going into screening processes is accurate. The report identifies that many organisations suffer weaknesses in their screening as a result of siloed data and multiple legacy systems. Often, these systems are unable to flag individuals or entities, opening up the risk that they may be provided with services even though listed on screening data sets.
Conversely, the FSA has also challenged the failure to review the rules of automated screening systems, which can result in false positives, or to callibrate screening to reflect risk strategies. Day-to-day oversight is often insufficient, the report concludes.
Commenting on the findings, Simon Pearson, director of compliance screening at Datanomic, says: “A complex IT infrastructure is not an excuse for poor systems and controls when it comes to ensuring compliance with the UK financial sections regime. The FSA report highlights some of the critical challenges and key functionality required in order to comply with current legislation.”