What is Watchlist Screening?

Watchlist screening is an essential part of a company's AML obligations and involves checking individuals and entities against global watchlists to identify any potential links to criminal activity, terrorist financing or politically exposed persons (PEPs).

Why is Watchlist Screening Important?

Watchlist screening is another essential step in the AML process, allowing companies to strengthen their internal financial security while also safeguarding the wider economy. Checking new and existing clients against watchlists is important for the following reasons:

• Screening against watchlists improves the detection of high-risk or criminal individuals and entities.
• Carrying out comprehensive watchlist screening means you can stay compliant with mandatory checks and avoid heavy fines in the process.  
• Builds trust with regulators and new customers by demonstrating ethical operations.
• Enables ongoing monitoring of customers and entities, as watchlists are frequently updated and alerts are sent if a client’s status changes.

What Are The Different Types of Watchlists?

Clients can be checked against a whole range of watchlists that contain varying types of information depending on the kind of organisation you’re screening. The different types of watchlists include:

Sanctions Lists 

Organisations that come under AML regulation must screen against these government-mandated registries in order to avoid filing transactions with sanctioned individuals or entities. Examples of sanctions lists include the UK Sanctions List (OFSI) and the EU Consolidated List. 

Politically-Exposed Persons (PEP) Lists

PEP screening identifies high-risk public individuals who could be exposed to corruption, including prominent public figures and those closely related to them. These watchlists allow you to identify high-risk individuals and carry out the necessary due diligence and monitoring measures. An example of a PEP list is a third-party resource like the Dow Jones Watchlist. 

Adverse Media Lists 

This type of watchlist cross-references new clients or entities for negative news, checking for potential criminal activity through media reports. Adverse media may include: 

• Financial crime reports
• Regulatory breaches
• Civil litigation
• Corporate malpractice
• Potential criminal activity. 

How Watchlist Screening Operates 

Watchlist screening is simple and is performed at the very start of your company’s relationship with a client, customer or entity in order to assess initial risk. With this being said, while watchlist screening is crucial during onboarding, it is also performed throughout your working relationship, with ongoing monitoring constantly checking clients against watchlists to check for status changes. 

How Matching Works

Matching is the simple process of checking the personal information of the customer with data from watchlist screening to see if any red flags arise. This can be achieved through several methods:

• Fuzzy Matching: Fuzzy matching uses algorithms to identify variations and similarities between the provided personal information and entries on watchlists. This allows for the detection of spelling errors, mistranslations, and other discrepancies. 

• Exact Matching: This basic method requires input data to exactly match a watchlist entry.

• Contextual Matching: Combines data to refine results and ensure matches take into account more advanced contextual information for more accurate findings.

• Risk Scoring: This considers aspects like match strength, the source of the match and the risk category to provide a score as to how strong the match might be. 

SmartSearch’s Automated Solution

Checking your customers manually against watchlists is a thing of the past. With SmartSearch’s innovative solution, you can embrace automated screening that uses real-time scanning to keep you constantly updated on changes in your client’s status. Using our platform, you can carry out robust checks in just minutes, helping you stay effortlessly compliant with mandatory AML procedures.

Book a demo to find out how we can streamline your AML services today!