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What Is Customer Screening?

Tuesday , 1, March 2022 Comments Off on What Is Customer Screening?

Screening involves a dynamic comparison of gathered data against external data sources of sanctioned lists, PEP lists, adverse media, etc.

Why do businesses need aml screening solutions? Vivid answers confine to the scope of risk management purposes only. Furthering into details unfold a large variety of concepts ingrained for deeper analysis of a customer, partner, or party.

Since several 'bad actors' like politically exposed persons, terrorist organizations, money launderers, etc. have propulsion of risky business strata, businesses engaging with them have to face untoward consequences. This is the primary reason why financial and banking institutions engage in AML screening before entertaining a customer or partner.

The principle objective behind customer screening aims at preventing businesses from getting exposed to terror financing activity, money laundering, tax criminality, bribery, corruption, etc. AML mandates customer screening in various regulated sectors, such as banking, financing, real estate, accountancy, law, trust, insurance, high-value goods dealers, lending, accountancy, and gaming.

Jurisdictions may ask various businesses to conduct customer screening due to the application of rules and regulations in the specific area. Therefore, these cases vary. Most commonly the AML regulated sector's ambit covers businesses from banking institutions, financial institutions, credit and investment businesses, money services businesses, accountants, lawyers, real estate agents, gaming businesses, deals of high-value goods, company and trust administration businesses.

Don't know which category your business fits in? Check with your industry body or trade association to find clarity regarding the same. Outside the AML regulated sector, there are still few businesses that need KYC screening, especially to prevent reputation damage, bribery & corruption-related cases, which are quite common in pharmaceutical industries, natural resources, and armaments.