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Complex Modern Sanctions Require Robust Compliance Programs

Financial institutions need to maintain a Sanctions Compliance Program capable of preventing transactions prohibited by governments against entities, individuals, and other countries. A Sanctions Risk & Controls Assessment is essential to optimize your Sanctions Compliance Program.

Sia Partners employs a team of former regulators and sanctions subject matter experts with extensive experience conducting Sanctions Risk & Controls Assessments. This makes Sia Partners uniquely positioned to help you optimize your Sanctions Compliance Program and ensure compliance with ever-changing and increasingly complex global and local regulations.

 

What has changed?

  1. Frequency at which sanctions rules change has increased, requiring more flexible and agile methodologies for implementing rules.
  2. Participation from other regulatory bodies (historically dominated by OFAC), resulting in the layered application of sanctions rules. 

More sanctions programs are targeting securities with complex nuances, increasing risk exposure due to manual processes required to supplement system limitations. 

Sia Partners Approach

  1. Front-to-End Sanctions Program Validation including Sanctions System Review; Configuration of Algorithms, Rules, and Matching Logic; Alerts Management Review; Fine-Tuning and Optimization of Matching Algorithms
  2. Compliance Testing to review Sanctions policies, procedures, and controls frameworks
  3. Sanctions Filtering Testing and Tuning using our Sanctions Challenger Bot to generate test cases and analyze outcomes
  4. Sanctions Advisory to evaluate client risk from a sanctions perspective
  5. Governance Review to create, edit, or enhance policies, procedures, and roles & responsibilities across the organization
  6. Training on the most current Sanctions Programs and regulations

Sia Partners' Sanctions Screening Offering

Sia Partners strives to deliver highly customizable strategic, operational, and technology solutions to clients, to meet global sanctions regulations.

Our solutions offering is a culmination of the firm’s combined years of experience and expertise in sanctions screening within the Financial Services industry.

We help our clients:

  • Navigate the constantly evolving sanctions landscape utilizing a risk-based approach 
  • Manage and mitigate risks through robust Sanctions Risk Assessments
  • Perform Model Validation, Testing, Tuning, and Optimization of sanctions screening tools
  • Design and implement effective sanctions compliance programs
  • Governance to ensure adequate oversight 
  • Report findings and recommendations to the board and senior management
  • Train compliance staff to protect against sanctions violations
  • Prepare for regulatory certification and audits

Sanctions Filtering Program Assessment

Model Validation

  • Review & Analyze conceptual soundness, input/output of the data of the sanctions filtering model
  • Validate the accuracy of Model calculations
  • Periodic review and benchmarking of the model to determine that it is working aligned with its intended purpose
  • End to End testing of all aspects of the process, including payment creation, filtering, hits detection, and user decision
  • Back test and verify the Real Time screening process

Tuning & Optimization

  • Perform an extensive review of the Sanctions Screening Methodology and Technology
  • Review the Batch Screening process and setup
  • Evaluate the efficacy of the current configuration of the screening technology
  • Perform Above and Below the line testing
  • Tune the screening filter to optimize performance to reduce false positives and maximize efficiencies in line with the financial institution’s risk objectives

Model Testing

  • Test the output and performance of the model 
  • Evaluate the model’s accuracy, robustness, and stability
  • Use of the Sanctions Challenger Bot to test the effectiveness of algorithms, name variations including letters, concatenated words, and various types of misspellings to minimize false positives
  • Test parameters and thresholds to determine the model’s effectiveness and efficiency
  • Recommend enhancements to better detect sanctions risks

Data Quality Assessment

  • Assess the source, quality, and relevance of the data fed into the model and processed using samples and real-time scenarios
  • Review data lineage throughout the lifecycle to detect errors and mitigate risks
  • Evaluate the appropriateness of the model documentation
  • Verify global sanctions lists updates are accurately processed in the model
  • Review change control process and procedures
Sanctions Filtering Program Assessment

A Sampling of Credentials

NYDFS Part 504 Compliance Review Project

  • Understand the Bank’s business nature and lines of business
  • Review and understand the Bank’s compliance program governance, structure, and risk profile
  • Establish a Review Matrix adhering to Part 504 requirements and implications
  • Validate and test the data integrity feeding to both Sanctions Filtering and Transaction Monitoring programs
  • Validate and test the configuration setup on both Sanctions Filtering and Transaction Monitoring programs
  • Review the alert management processes

NYDFS Part 504 Review

  • Reviewed Bank’s Compliance regarding NYDFS 504 in terms of governance, policies, and procedures
  • Performed extensive testing on 3 sanction screening, by testing over 10k scenarios in various formats: exact names, simple/medium/high complexity fuzzy variations, SWIFT messages, FED/CHIPS/Check/ACH formats
  • Performed  extensive testing of the transaction monitoring system with detailed testing of all 20 existing scenarios
  • Report findings and provide enhancements to Fuzzy logic, Systems Configuration, and Governance
  • Draft a report which serves in support of formal Compliance Attestation related to NYSDFS Part 504 

Sanctions Screening Testing Project

  • Understand the Automatic Sanction Screening Design
  • Execute Sanction Screening Testing on On-boarding and Payment Processing
  • Evaluate the Change Control and Management Process over the Sanction Screening Automation and Algorithm

AML Monitoring Data Validation

  • Understand the AML Monitoring Data Mapping Design
  • Evaluate the Data Conversion Logic
  • Prepare Data Validation Testing
  • Execute Data Validation Testing
  • Evaluate the Data Integrity Change Control Process and Management

Sanctions Screening System Upgrade

  • Reviewed vendor provided upgrade that introduced a new fuzzy algorithm to the engine: Jaro-Winkler
  • Established baseline scenarios, and performed full re-testing and tuning exercise 
  • Tested efficiency and effectiveness and defined new scenarios

Transaction Monitoring Rule Tuning

  • Reviewed all existing scenarios of the Bank
  • Using 1 year's worth of payment data and alerts, calibrated models and proposed rule tuning, and defined new scenarios

Other Projects

  • Feasibility Study of new Sanction Screening Tool using Sanction Challenger
  • Analytics-assisted Lookback exercise for sanction screening
  • Reviewed MR(I)As and used our tools as supporting evidence for enhancements to regulators

 

 

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