How does the regulatory landscape impact the effectiveness of sanction screening in AML?

The regulatory landscape plays a crucial role in shaping the effectiveness of sanction screening in AML. Financial institutions are required by law to comply with a complex web of regulations, which can vary depending on the country, region, or industry they operate in. The following are ways that the regulatory landscape impacts the effectiveness of sanction screening in AML:

  1. Regulatory requirements: Financial institutions must comply with a wide range of AML and CTF regulations, including conducting sanction screening as part of their compliance programs. These regulations set out specific requirements for conducting sanction screening, what lists should be checked, and how to respond to positive hits.
  2. Sanctions regimes: Governments and international organizations can impose sanctions on individuals, entities, or countries for a variety of reasons, including terrorism, money laundering, human rights violations, and weapons proliferation. Financial institutions must be aware of these sanctions regimes and ensure that they are checking their customer base against relevant lists.
  3. List quality and coverage: The quality and coverage of sanction lists can vary depending on the source and the jurisdiction. Some lists may be incomplete or out-of-date, while others may not be comprehensive enough to capture all the relevant entities. Financial institutions must ensure that they are checking their customer base against the most up-to-date and relevant lists.
  4. Cross-border transactions: Sanction screening can be particularly challenging for cross-border transactions, as financial institutions must comply with the regulations of multiple jurisdictions. They must also be aware of any differences in sanctions regimes between these jurisdictions and ensure that they are screening against all relevant lists.


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