Unlocking Compliance: The Essential Role of Enhanced Screening Data in High-Risk Environments

Recent findings from LSEG highlight a pressing issue faced by financial institutions and designated non-financial businesses and professions (DNFBPs): the challenges of managing compliance risks due to inadequate and outdated screening data. This critical research reveals insights from 400 senior compliance leaders and emphasizes the necessity for timely and precise data in today’s intricate regulatory landscape.

Key Challenges in Compliance Management

One of the primary concerns identified in the report is the sluggishness in data updates. Over 50% of the respondents indicated that they receive sanctions information after a delay of 24 hours or more. This delay poses a significant risk of breaching regulatory requirements. Furthermore, 32% of participants reported experiencing false positive rates that could reach up to 30% within a typical month, which adds to both operational strain and compliance costs.

The Need for Improved Data Quality

• 44% of organizations believe that enhancing coverage and obtaining more accurate and comprehensive data is the most valuable enhancement they could make to their sanctions and AML systems.
• Respondents highlighted the critical role of timely data updates in effective compliance management.

Embracing Technology for Enhanced Compliance

In response to these challenges, many institutions are turning to technology-driven solutions. Approximately 31% of participants view AI and machine learning as pivotal tools for improving screening effectiveness. In fact, 65% anticipate that these technologies will play a significant role by 2025.

Investing in Future Technologies

More than half of the respondents plan to invest in generative AI and natural language models over the next three years. However, the report underscores that the implementation of AI must be supported by trusted data. Without high-quality and timely information, automation could become a liability rather than an asset.

The Bottom Line

The overarching message is clear: in an environment where every second counts, good data is essential for effective compliance. For a deeper understanding of these findings, you can read the full report here.

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