FI Supervision 30: The banks can strengthen their sanction screening

FI has analyzed the extent to which the banks' automated systems for sanction screening detects sanctioned persons and companies and transactions linked to such actors. It appears that none of the banks in the analysis have systems, that in the test environment, successfully managed to identify all names on the sanctions lists.

– The banks generally need to do more to strengthen their systems for sanction screening. In their actual operations, we expect all banks to be able to detect and prevent all activities that can be linked to sanctioned parties, says Erik Blommé, head of department for Money Laundering Supervision at FI.

The banks have technical solutions

Despite the fact that no system could fully detect all names, FI assesses that the banks generally have a good understanding of the sanctions regulations and have the technical solutions required to be able to comply with the legal requirements. Furthermore, the analysis shows that the effectiveness is largely correlated to the size of the bank; in other words, the larger the bank, the higher the effectiveness. A consequence of this could be that risks are concentrated to small and medium-sized banks.

The analysis also shows that the banks' effectiveness was generally higher when screening transactions than for customer screening.

The fact that the review was carried out in a test environment means that the review of the systems' accuracy and efficiency did not include actual business relationships or transactions.

FI may follow up on how the banks comply with the sanctions regulations in the ongoing supervision or through separate investigations.