Enhanced Screening: Moving Beyond the Basics for Robust Compliance

In the modern world, basic watchlist screening is no longer enough to protect your business from the threat of financial crime and other compliance risks. White-collar criminals are becoming increasingly sophisticated, which has led to regulators adopting more robust compliance screening measures to mitigate these risks effectively. 

More advanced compliance measures (such as those required to combat fraud, money laundering and terrorism financing) are necessary, which is where enhanced screening comes into play. 

But what is enhanced screening, and why is it so essential for modern businesses and organisations in Britain? We've created this guide to help you understand exactly what enhanced screening is, and we also aim to show you how we can put our advanced tools to work for your business.

If you’re ready to get started with the SmartSearch platform, we’ll be happy to discuss your options with you. 

Please contact an AML expert or book your free demo today to find out more.

What is Enhanced Screening?

So, what is enhanced screening?

Enhanced screening is a term that represents the new generation of AML (anti-money laundering) compliance checks. In most cases, enhanced screening involves combining multiple data sources with advanced technology to provide a more complete form of AML risk assessment. 

Essentially, the term enhanced screening refers to several different practices in the compliance world, offering a comprehensive and multi-faceted approach that goes beyond standard AML checks. If used correctly, enhanced screening measures can help to protect your organisation from regulatory penalties, reputational damage and financial losses, offering many tangible benefits.

Unlike basic screening practices (which typically only check names against static watchlists), enhanced screening measures usually incorporate the following factors:

• Real-time data monitoring: Data can be monitored in real-time, including global sanctions lists, PEP (Politically Exposed Persons) registers and adverse media sources.
• Advanced analytics tools: Advanced data analytics tools are often used to catch complex risk patterns and hidden relationships that basic screening tactics might not detect.
• Ongoing monitoring: Enhanced screening techniques usually include ongoing monitoring, rather than just one-time checks during the onboarding process.
• AI-powered matching: AI (artificial intelligence) has become a major player in the compliance world, useful for future-proofing regulatory compliance and a range of other compliance matters.

Taking a multi-faceted approach like this can help British businesses and organisations identify not just the most obvious risks, but also any emerging threats that might otherwise go undetected. 

Beyond Basic Watchlists: The Need for Enhanced Screening

Traditional basic watchlist screening has become less important in recent years due to its limitations. Basic screening tasks typically involve checking customer identities against government-sanctioned databases and PEP lists. 

Whilst basic screening tasks do have their uses, they also have several limitations:

• Nuanced risks may go undetected: Basic screening processes may not always detect nuanced risks, which can be an issue. For example, if someone has had indirect exposure to illicit activities or fraud.
• Compliance gaps: If watchlists are not updated in real time, there may be compliance gaps.
• Some individuals may not be detected properly: Individuals and entities operating under aliases or modified identities may not be accounted for.

Instead, enhanced screening can provide a comprehensive approach to compliance, incorporating broader data sources and analytical tools to uncover hidden risks. 

Enhanced screening methods address the limitations of basic screening by incorporating the following features:

• Real-time data updates: Instant data updates in real-time are included to ensure accuracy.
• Broader risk indicators: Enhanced compliance screening uses broader risk indicators, including behavioural and transactional patterns.
• Advanced analytics tools: Advanced analytics tools and algorithms can detect hidden connections between high-risk entities.

At SmartSearch, we primarily use Dow Jones Watchlist screening to carry out our checks, conducting them daily. By moving beyond basic screening measures, modern businesses and organisations can significantly improve their compliance and reduce the risk of incurring legal penalties.

Adverse Media Screening: Protecting Your Reputation

One of the main aspects of enhanced screening is something known as adverse media screening. Adverse media screening is a process that involves monitoring global news sources, online blogs and public records for negative coverage related to specific individuals or businesses. 

Adverse media screening is an important way to identify the early warning signs of fraud, also helping to identify reputational issues that might be missed by conventional watchlists.

Why adverse media screening matters:

• Businesses can avoid associations with individuals or companies that have been linked to negative things like fraud, corruption or organised crime in the past.
• Global media sources can be monitored continuously, providing real-time updates on emerging threats.
• Adverse media screening is becoming more and more expected by regulatory bodies in the UK (as part of the enhanced due diligence process), so it’s important to get ahead and integrate these screening checks into your business.

If used correctly, adverse media compliance screening can help you avoid regulatory fines and penalties, as well as protect your brand reputation from negative media exposure. 

For example, if a financial institution unknowingly onboard a new client who has been linked to a financial scandal in the past, the organisation could face severe penalties. However, continuous adverse media monitoring might help the business to mitigate these risks on a proactive basis.

The Role of Sanctions & PEP Screening in Enhanced Due Diligence

Sanction lists and PEPs databases are another important part of the enhanced screening process. However, PEPs databases and Sanctions lists are constantly evolving in real time, which can make manual screening methods seem inefficient and prone to error. 

Enhanced screening measures can automate these processes by:

• Cross-referencing global sanctions lists: Global sanctions lists can be accessed and cross-referenced on a real-time basis.
• Flagging PEPs and their close associates: PEPs and those close to them can be flagged up automatically to prevent illicit financial flows.
• Reducing false positives: Intelligent fuzzy matching algorithms can be used to reduce the risk of false positives.

If your business fails to properly screen for sanctions and PEPs, it could result in hefty fines and penalties, which may have a negative effect on your company. By using enhanced screening methods, you can ensure that compliance is always met while minimising your manual workload.

The Growing Complexity of Regulatory Requirements

With global cyber threats like financial crime and terrorism escalating, regulatory bodies are raising their compliance expectations. Businesses are now required to conduct more thorough customer due diligence checks, which include:

• Screening for a wider range of risk factors: This includes sanctions, PEPs and adverse media lists.

• Implement ongoing monitoring: Instead of one-off checks, ongoing monitoring must instead be implemented.

• Use AI tools and fuzzy matching: AI tools and fuzzy matching algorithms can help to reduce false positives and improve accuracy.

• Implementing enhanced due diligence: Enhanced due diligence tasks should be implemented for high-risk clients.

As compliance requirements have grown more stringent, enhanced screening methods have become a necessity for British businesses, rather than a choice. By using these enhanced screening methods, you can ensure that your company stays ahead of any evolving compliance demands that may arise. 

New regulations like the UK’s Economic Crime and Corporate Transparency Act 2023 also need to be complied with, so it’s important you make yourself aware of the impact of this legislation.

Enhanced Screening: The Future of Compliance

Enhanced screening measures have become a vital tool for protecting businesses and organisations from the rising threat of financial crime, regulatory penalties and reputational damage. Businesses can ensure they stay ahead of potential risks by going beyond basic watchlist checks, incorporating adverse media screening and adapting to changing compliance regulations as they arise.

Ultimately, understanding what is enhanced screening and implementing it effectively is a key factor in maintaining strong, compliant and secure business operations.

At SmartSearch, we specialise in cutting-edge compliance solutions that simplify enhanced screening and AML checks, able to help UK businesses stay secure and compliant whilst working with us.

Are you ready to move beyond the basics? Speak to an AML and compliance expert today to learn how our innovative technology can help you with your enhanced screening measures.