Will you ever allow your customers to exploit your organization for money laundering activities? Like every other organization, you won’t. The reason is clear. In 2023, A bank in the UK that did not successfully implement the PEP screening using the advanced AML solutions, let a politically exposed person move illicit funds fined for 100 million euros.
This is just one example, highlighting the importance of AI in PEP screening, for AML compliance for the institution while onboarding politically exposed persons.
The AML rules and regulations help financial organizations protect their business from money laundering crimes.
However, for those companies who are still opting for the old and conventional methods of PEP screening the compliance efforts are weaker and allow the criminals to exploit your organizations.
However, the integration of AI in PEP checks and screening processes has made it quite easy for financial institutions to handle higher risk individually more effectively and efficiently.
In this blog, we will explain how AI is transforming compliance efforts particularly while onboarding new clients and Politically exposed person monitoring and screening.
Cost of non-complying with AML regulations regarding the PEP Screening
In recent years, regulatory bodies have posed billions of dollars in fines for financial institutions not complying with the AML rules and regulations. Let’s discuss the most prominent ones.
- The BNP Paribas and Pribas Prime Brokerage were fined by the United-based Financial Industry Regulatory Authority (FINRA) fines almost 15 million dollars for not fully complying with the AML system.
- In another move, in 2015, the financial conduct authority, posed 75 million dollars because the company was not able to assess the risk level of different customers while onboarding them.
Importance of AI PEP Screening for Financial Institutions
The financial institutions have to purchase and incorporate the AML solution, no matter which AML solution provider you interact with.
They all collect data on politically exposed persons or other sanctioned people from different sources or third parties. So, first ensure you make business relations with such service provider, who have advance monitoring and screening tools, and their database is updated.
Because PEP checks and screening are not simply searching the people against the database. Instead, it is beyond just searching and involves knowing the background history of politically exposed persons, criminal records, and their involvement in corruption, money laundering, terrorist financing, and other criminal activities.
This helps businesses avoid making business relationships with such entities.
To achieve this, financial institutions have to rely on Artificial Intelligence that can analyze the unstructured data and look at the individual’s transaction behavior and background history at the time of pep screening more accurately and error-free,
How Artificial Intelligence Changes the PEPs Checks and Screening Process
- Faster PEP screening
Crimes are committed at very fast speed, So, the screening and monitoring process must be faster and more accurate.
AI in PEP screening can screen millions of records in seconds by using an advanced set of algorithms.
The advanced algorithm not only reduces the chances of errors that are often made using conventional methods but also allows the compliance officers to focus on other important tasks.
- Efficient and accurate PEP Checks and Screening Process
Is the traditional way to perform customer due diligence and screening efficient enough to rely on? Money launderers are very clever and they often find loopholes in the system to commit criminal activities. However, with the advanced AML screening process, financial institutions can generate accurate, with zero false positive and false negative results.
- Real-Time Money Laundering Threat Detection
For ongoing threats and crimes that are committed real, it is crucial to have AML software that is able do real-time monitor and detect suspicious threats that could lead to money laundering activities. The AI tools allow the business to quickly respond to emerging risk that leads to money laundering and other financial crimes.
- Ethical Considerations and Bias Mitigation
Advanced AI algorithms can be designed to minimize biases in the screening process, promoting fairness and equality in risk assessments. Organizations need to ensure that AI systems used for PEP checks are transparent, allowing stakeholders to understand how decisions are made.
- Enhanced User Experience
Many AI tools come with intuitive interfaces that simplify the process of PEP checks for compliance teams, making it easier to navigate complex data. AI systems often include training modules that help compliance officers understand how to use the tools for PEP screening effectively.
Are you still incorporating the old and conventional Methods of PEP screening? This could harm your business reputation and cause you millions of dollars in fines. Elevate your compliance Program while monitoring and screening the politically exposed person. Bring AML watcher to your AML solution and make a difference.
