Watch list screening is the bedrock of a solid compliance framework. Yet, completing watch list screening due diligence reviews internally can be a costly and time-consuming affair. Your company’s sanctions compliance analysts must continuously investigate all watch list match alerts, including the high rate of false positives, and prepare compliance reports.
For many businesses, outsourced watch list screening due diligence has emerged as a time-saving and cost-effective alternative to trying to complete review and resolve activities internally. But is this the right option for your company? Here are some thoughts to ponder when considering outsourced watch list screening due diligence for your business.
Do You Have a Team?
Does your company currently have a qualified team to handle your watch list screening due diligence needs? And if so, are they well equipped to handle all of the screening match alerts that require review and resolution? If you’re a small business that doesn’t have the necessary framework to engage in watch list screening reviews internally—or your staff doesn’t have the appropriate expertise—it might be a good time to consider outsourcing.
Building a sanctions analyst team from the ground up can burden your business with significant up-front costs and time constraints. If your company is implementing sanctions screening for the first time or creating a new baseline for all customers, outsourcing the due diligence could save on these costs while maintaining a heightened level of service that would take time to reach on your own.
Have You Defined Your Risk Appetite?
Before making any decisions about outsourced watch list screening, it’s imperative that your business effectively define its risk appetite and risk policies related to sanctions compliance. This will inform your decision about whether it is within your scope of risk to outsource your watch list screening due diligence reviews.
For some businesses, the increased liability of having vendors handle sensitive customer data is not worth the cost savings that outsourcing promises. However, with the proper communication and vendor management, outsourced watch list screening due diligence vendors can provide secure service with limited risk. It is important to balance your company’s risk appetite with operational burdens. Every business is different, and there is no “secret formula” to answering this question universally.
Can You Handle Temporary Spikes in Volume?
In an ideal world, your sanctions screening program’s volume would remain consistent, with minor spikes and valleys. Unfortunately, that is not always the case. Acute fluctuations in the number of watch list match alerts can arise around regulatory updates, changes in screening rules or the launch of new products or services into new markets. These temporary—yet heavy—bumps in volume can push your sanctions analyst staff to the breaking point.
In these instances, it can be cost effective to use outsourced screening due diligence on a one-off basis, as needed, to fulfill the temporarily increased burden of completing reviews and resolving match alerts. Ensure any outsourced screening vendor can provide a customized service to fit your due diligence criteria.
Have You Identified a Watch List Screening Vendor?
If you are considering outsourced watch list screening, make sure the chosen vendor provides a secure, customized approach. Outsourced watch list screening providers can work with you to create a tailored set of rules to fit your unique screening criteria. Outsourcing isn’t for everyone, but it is an excellent way to save on costs and ensure your company’s compliance is managed effectively.
Learn More about Watch List Screening
Do you want to learn more about effective watch list screening? Check out our comprehensive sanctions screening white paper series for the latest tips and strategies that will help your company meet its compliance needs.
Rosalie Griebel serves as director of product management for CSI Regulatory Compliance Group. In her role, Rosalie oversees the strategic development of CSI’s various regulatory compliance solutions.