Insights

The customer screening cycle


When should you screen?

• PRE-MEETING – It is a good idea to screen prospective customers before you meet them to find out whether they are the type of people you should be doing business with.

• DURING customer on-boarding, before accepting the customer. In most jurisdictions it is no longer acceptable to on-board a customer and screen them for the first time 30 days later

• DURING a review of customer files

• ONCE a customer has been on-boarded, more or less regularly according to the customer’s risk level

• IF a customer has been dormant for a while and becomes active again

• IF a customer attempts a large, out of character transaction

RiskScreen Core’s open license enables you to add multiple users at no extra cost so you can empower your business development staff (your first line of defence) with access to your due diligence technology

 

What should you screen?

As a minimum, customers should be screened against the lists stipulated for your sector. E.g. if regulations require that you screen customers for PEP status, this must be done for all customers—new and existing.

Other sources to screen against include global sanctions and government watch lists and adverse media.

RiskScreen’s live search engine screens your customers against world-leading Dow Jones AML datasets (including sanctions, PEPs database and watch lists) plus it has an integrated live adverse media search – screening your customer against all required sources in one name search.

 

RiskScreen search sources

When to do enhanced due diligence

Enhanced due diligence (EDD) means investigating a customer more thoroughly than you would in regular screening. In most jurisdictions, in the course of regular screening, you will be required to conduct EDD when you have identified that you’re dealing with a high risk customer.

The form your EDD takes should depend on the nature and severity of the risk. It can vary from an adverse media check, to investigating corporate structures linked to an individual, to verifying income sources.

EDD should leave you confident that any risk has been mitigated and is unlikely to be realised.

Red flags that might lead you to carry out EDD include:

• A customer is a PEP or is on a watch list (PEP status alone isn’t sufficient to reject a customer: the majority of PEPs are not engaged in corrupt activities, though they should be treated as high risk)

• A customer has adverse media associated with them relating either to financial crime risk or to reputational risk for your business

• A customer told you something during on-boarding which causes you concern, such as an unusual proposed activity profile, or that they have family links to risky jurisdictions

Always document both the EDD you carry out and the rationale behind any resulting actions.

RiskScreen Core‘s EDD search mode allows you to generate EDD reports at a fraction of the cost of the reports being produced externally.

 

Screening source of funds

If you have concerns about the source of a customer’s funds or wealth, screen specifically in relation to that: look in more detail at the property or funds in question; consider screening it as well as the customer.

 

Interpreting results

1. Confirm that the results do indeed relate to your customer. For an exact name match, use metadata such as passport number, date of birth, country of origin and so on.

2. If you get a name match that is close but not identical, check the metadata to ensure it isn’t an alias for your customer

3. PEPs, sanctions and watch lists are drawn from databases compiled by qualified authorities about individuals who pose some form of risk. Adverse media searches pull in material from all of the search-able web. In analysing adverse media search results it is important to consider the providence of each result. Does it come from a well-regarded, widely-read news organisation? Or is it drawn from a smaller blog or website, the output of which may be less reliable? Unmoderated blogs or results from small, local news outlets, aren’t necessarily irrelevant but you should seek to corroborate any information gleaned from them against other sources

4. A result that says ‘this person is involved in bribery’ is easy to interpret. Other types of result—a complex corporate structure from an OpenCorporates search, for example— may not be. Your staff will need a degree of understanding of money laundering ‘hotspots’ and methodologies in order to assess risk effectively, and should be trained accordingly.

 

Download RiskScreen Core example pdf report

 

Ongoing risk profile monitoring

Whilst customers are generally, screened using a manual ‘point’ system at the on-boarding and review stages of the relationship, their names can be added to a ‘batch’ screening system which continuously screens your entire customer base overnight. The purpose of this is to ensure that your business is alerted to changes in the status or risk profile of your customers at the earliest possible opportunity, allowing you to react accordingly in compliance with your risk-based anti money laundering obligations.

RiskScreen’s batch screening engine (RiskScreen Batch) screens your entire customer base against world-leading Dow Jones AML datasets at whatever depth and frequency you choose and is the first truly risk-based customer batch screening engine.

 

 

5 Common Pitfalls of Customer Screening

The ‘Absence of Suspicion’ – Why You Need to Batch Screen Your Customers