Transforming sanctions screening for paper instruments: Current challenges and automated solutions


Financial institutions continue to face compliance challenges due to increased regulations, growing businesses and ongoing inefficiency mitigation. Anti-money laundering (AML) and sanctions compliance demand quick and proactive adaptation of processes in order to stay ahead of the curve. Chief challenges for financial institutions include navigating highly manual tasks such as alert reviews and clearance and paper instrument transaction processing.

Many tools have been developed in an effort to mitigate inefficiencies and avoid potential billions in fines for violations of US economic sanctions. Solutions such as optical character recognition (OCR), native language processing (NLP), robotic process automation (RPA), AI and machine learning are at the forefront of technologies in transaction processing efficiency, risk mitigation and savings in overall workforce costs. However, the complexity and sophistication of these tools require correct implementation.

The challenges with paper screening

Traditional methods of screening simply cannot keep pace with modern business demands. The manual nature of processing paper instruments paired with the sheer volume of transactions creates limitless potential for error because data extraction and analysis, screening alert review and record keeping are complex. Current challenges include:

Data extraction and analysis

  • Data manipulation challenges due to complex procedures
  • Increased risk of incorrect or incomplete data

Screening and alert review

  • Data entry errors impacting filters and effectiveness
  • High numbers of false positives and duplicates due to screening irrelevant data

Quality assurance and audit

  • Slowly generated, fragmented, paper-based audit trails
  • Limited and manual controls

The benefits of moving to automated solutions

Despite increasing regulatory scrutiny and sanctions risk exposure, many financial institutions are still using outdated technologies and inefficient manual processes that result in inaccurate results. In order to remediate these inefficiencies, financial institutions should integrate automated solutions into their current technology infrastructure.

Financial institutions that adopt new, automated technologies can reap a number of benefits, including:

  • Ability to quickly and proactively adapt to increased volumes and regulatory expectations
  • Increased efficiency of end-to-end processing with more automated data transformation downstream and the reduction of manual data entry
  • Higher percentage of productive alerts captured by screening systems utilizing more accurate data
  • Potential resource and operating cost savings by automating processes such as data extraction, manipulation and analysis

Automated solutions that can help alleviate paper screening challenges

Data extraction and analysis

Optical character recognition (OCR)

OCR is a process that electronically converts text by singling out specific characters from a scan or an image of a paper instrument. The extracted characters are then rebuilt into specified fields within the end system. OCR can be designed to accommodate different formats of text (i.e., handwritten or printed) and adapt to different scripts.

Text analytics and natural language processing (NLP)

Advanced text analytics and NLP are artificial intelligence techniques that can be used to discover relevant information in text and transform it into data. In the context of paper screening, this technique can be used to replace manual paper instrument analysis and extraction procedures (e.g., classifying and selecting names and places from documents).

Screening and alert reviews

Robotic process automation (RPA)

RPA platforms mimic the repetitive, labor-intensive, individual actions and process steps that are made by humans. RPA can be used to automate the online screening process in which an analyst must enter information into relevant fields for screening. In addition, evidence gathering can be automated, using universal matching from internal or external sources for analyst consideration during alert reviews, thereby reducing the time spent on collecting and consolidating research.

Intelligent process automation (IPA)

Post-alert generation, machine learning and IPA solutions can be applied to the alerts based on client, payment and list information and external information to eliminate alerts based on pre-defined rules and disposition history. Automated match resolution techniques can reduce the quantity of false positives that would require further investigation.

Quality assurance and audit trail

Workflow and case management

While workflow and case management solutions are not new, they are not always adequately used to facilitate trade processing, alert management, and quality controls throughout the process. Workflow solutions can be customized to meet specific requirements surrounding supporting evidence, and approvals can be attached to a case to provide an end-to-end audit trail.

Implementing automated solutions for paper screening

Integrating new technologies for paper instruments into an existing sanctions screening program is becoming increasingly necessary for financial institutions facing rising costs associated with compliance and demand for enhanced controls. As financial institutions continue to deal with higher transaction volumes and shorter processing times, it is important to understand and consider how new solutions can positively impact and reduce the risk of misaligned paper screening processes.

When it comes to innovating and automating screening processes, financial institutions will need to determine which automation opportunities are most pertinent, given their current processes, operations and risk appetite.

Key steps to consider when implementing automated solutions:
  • Conduct an in-depth analysis of the current paper instrument management and screening process to understand capabilities, limitations and automation opportunities
  • Define the future process, including target architecture and requirements for each improvement area
  • Define a baseline risk tolerance to evaluate the automated solution against acceptable risk factors
  • Choose a qualified vendor through the RFP or vendor selection process and conduct proofs-of-concept, leveraging well-defined use cases
  • Implement and integrate automation tools based on the defined requirements
  • Conduct tuning, if applicable, of the automated solutions to ensure they are in line with the financial institution's risk tolerance and monitor solution performance over time
  • Validate the implementation of the solutions (internally or externally), and identify gaps or improvement opportunities following industry standards and regulatory expectations

How PwC can help

Our Financial Crimes Unit (FCU) brings together the full breadth of PwC’s technology, regulatory and investigative experience with the work of over 2,000 global financial crimes professionals in cybersecurity, anti-money laundering, sanctions, fraud, anti-bribery and anti-corruption. We bring an adaptive, comprehensive approach that reflects that of major financial institutions and government agencies. With secure systems, future-proof technology and compliant operations, you’ll find a path forward where all else are hindered by obstacles.

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Contact us

Jeff Lavine

Global Financial Crimes Leader, PwC US

John Sabatini

Clients and Markets Leader, Cyber, Risk & Regulatory, PwC US

Vikas Agarwal

Financial Services Risk & Regulatory Leader, PwC US

Devesh Desai

Partner, Financial Crime Managed Services, PwC US

Julien Chanier

Director, PwC US

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