Executive Summary
This report provides an independent analysis of the challenges andbest practices in managing customer and transaction screening processes—“ watchlist filtering”—for sanctions compliance, transaction monitoring and customer due diligence at large financial institutions. The study aims to bring forth issues related to achieving efficiency and consistency across complex, distributed compliance operations at major global banks, across geographic and line-of-business divisions.
The study focuses in particular on sanctions compliance, which is the area of AML compliance that is most dependent on watchlist data, especially data from regulatory watchlists. Indeed, from the technology point of view, sanctions compliance might be said to be primarily an issue of effective management and exploitation of data.
This report is based on Celent’s own observations of the state of sanctions compliance, as well as conversations with some 15 large banks in North America, Europe and Asia. Findings include:
- The cost of maintaining sanctions compliance is only escalating.The home markets of many of the large global banks—the US, UK and EU countries— have active regulators that require banks to adhere to the latest developments in technology and operations, sending new spending into the millions annually.
- Celent estimates that for firms managing watchlists internally, this cost alone averages some US$1.5 million annually at a large financial institution.
- To keep costs in check and improve operations, large banks are organizing centralized operations and technology platforms that perform sanctions compliance across multiple business lines of the bank.
- Some banks feel they have watchlist management under control, while others see it as a burden incurring significant cost, effort and specialized expertise. Based on our conversations with banks, Celent believes that even firms that are now managing their watchlists internally will tend to move to commercial watchlist management services.
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Detailed report link: here
