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Transaction Screening (TS)
Updated on:
July 19, 2023

Transaction Screening (TS)

The process of evaluating financial transactions against predetermined criteria to ensure compliance with sanctions, embargoes, and regulatory requirements.

  • Essential for compliance with international regulations
  • Involves screening against sanctions lists, Politically Exposed Persons (PEPs), and other high-risk entities
  • Helps prevent financial institutions from engaging in business with prohibited parties
  • Utilises advanced technology to automate and streamline the process

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Transaction screening is a vital procedure undertaken by financial services organisations to ensure compliance with international regulations and to maintain a strong risk management framework. This process entails evaluating financial transactions against predetermined criteria, including sanctions lists, Politically Exposed Persons (PEPs), and other high-risk entities, to prevent financial institutions from engaging in business with prohibited parties.

Financial services organisations are required to comply with international sanctions and embargoes imposed by governments and regulatory bodies, such as the United Nations, the European Union, and the Office of Foreign Assets Control (OFAC). These sanctions and embargoes are designed to prevent illegal activities, such as money laundering, terrorism financing, and the proliferation of weapons of mass destruction. Effective transaction screening enables organisations to identify and flag high-risk transactions, which can then be subject to further investigation and, if necessary, reported to the relevant authorities.

To ensure efficient and accurate transaction screening, financial services organisations often employ advanced technology solutions that automate the process and reduce the risk of human error. These solutions typically involve the use of sophisticated algorithms and machine learning techniques to match transaction data against sanctions lists and other risk criteria, as well as to update screening parameters in real-time as new sanctions and regulatory requirements emerge.

In summary, transaction screening is a critical compliance measure for financial services organisations, helping to protect them from the reputational and financial risks associated with non-compliance. By implementing robust transaction screening processes and leveraging advanced technology, these organisations can effectively mitigate risk and adhere to the stringent regulatory landscape governing their industry.

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