Inpay’s expansion has earned it recognition as one of Denmark’s fastest-growing companies and one of Europe’s most rapidly advancing FinTechs. However, this growth brought challenges that meant the company needed to re-evaluate its approach to compliance. 

The limits of building in-house

Inpay started out with an in-house compliance solution built when the company was founded. This solution was based on simplistic transaction thresholds. As the company gained more customers and processed more transactions, the limitations of this approach became clear. 

Continually altering payment screening and transaction monitoring parameters to cope with increasingly complex transactions created a huge strain on Inpay’s IT capabilities. A lack of flexibility in the existing system threatened to restrict further growth, with resources constantly diverted to make the necessary adjustments. 

“We came from an in-house solution that essentially took ten years to build. The moment we started having a larger inflow of transactions and more complex scenarios, we were limited in what we could design.”

Lukas Andersen, MLRO and Head of Financial Crime Risk, Inpay

Inpay decided to look for external vendors so they could remain a growing company and turn compliance from a drain on resources into a competitive advantage. 

ComplyAdvantage offers streamlined implementation 

Important criteria in Inpay’s search for a RegTech vendor were: 

• Accuracy and flexibility when screening and monitoring customers and transactions. 
• Comprehensive, customized data dashboards. 
• An intuitive user interface. 
• Maximum uptime during the implementation process. 
• Secure data handling. 
• Cost per transaction. 

As Inpay conducted its selection process, our platform came out on top in each of these categories, with the ability to adapt its service to Inpay’s needs being a crucial differentiator. 

Inpay needed its compliance solution to integrate with a complex proprietary payments system and approached the partnership with a list of requirements, scenarios, and intended outcomes. The company’s compliance team worked closely with us to tailor a solution that satisfied these, with our team providing additional scenarios to enhance Inpay’s coverage without compromising its control over its tech stack. 

Since implementation in 2017, our teams have continued to work together to optimize Inpay’s regulatory compliance, with regular check-ins and feedback allowing any changes to be made quickly. 

“What really set ComplyAdvantage apart from the competition was the ease of implementation and the service level. Even in the introductory meetings, it was clear that we would be listened to and that we could set the direction of what we wanted, but with really great feedback from the ComplyAdvantage implementation team.” 

Lukas Andersen, MLRO and Head of Financial Crime Risk, Inpay 

Enhanced flexibility makes the difference

Thanks to fully customizable screening and monitoring parameters, Inpay has been able to tailor financial crime controls to its evolving risk profile and appetite. As the company targets new industries and markets, Inpay can adapt to changing risks by creating nuanced rules for different customer segments and customizing search profiles for ongoing monitoring purposes. 

This ability to make changes with minimal disruption is informed by in-depth dashboards allowing Inpay’s compliance team to analyze its performance, with our team on hand to create additional reporting capabilities if any gaps emerge. 

Comprehensive data has also been instrumental in helping Inpay build strong relationships with regulators. Enhanced data points have strengthened its suspicious activity report (SAR) filings, while real-time customer data updates ensure compliance with evolving sanctions lists and regulatory requirements for instant payments and verification-of-payee capabilities.

Demonstrating the value of compliance 

Since partnering with us, Inpay has seen improvements across all areas of transaction screening and monitoring, from effective risk management to enhanced operational efficiency. Inpay’s most recent regulatory audit identified zero areas of non-compliance, testifying to the effectiveness of our solutions. 

“ComplyAdvantage has not only been able to reduce the number of false positives we see, but also the time we spend on each alert.”

Lukas Andersen, MLRO and Head of Financial Crime Risk, Inpay 

In addition to mitigating risks and avoiding regulatory action, our partnership has enabled Inpay to streamline its compliance workflows. With a data-driven understanding of how long certain scenarios take to resolve, Inpay has optimized its resource allocation and staff training to the point where it can handle thousands of alerts with a relatively small team of analysts. 

This means Inpay has been able both to achieve specific compliance outcomes and refine its wider strategy. Equipped with data on the time and money saved on alerts, the company’s compliance team can clearly demonstrate efficiency and value in discussions with key internal stakeholders, showing how investing in compliance can drive growth.

“If you’re evaluating whether you want to build or you want to buy, what’s easy to forget is the return on investment. Any business that needs a reliable but innovative solution that can adapt to the dynamic landscape of cross-border payments should consider ComplyAdvantage.”  

Lukas Andersen, MLRO and Head of Financial Crime Risk, Inpay 

The post Inpay uses advanced payment screening and transaction monitoring to drive rapid growth appeared first on ComplyAdvantage.

Based in Singapore, Tazapay accepts payments from 173 countries across a diverse array of payment rails and channels. These span local payment networks such as PayNow, FedWire, and SEPA Instant Credit Transfers, as well as international channels like Visa, Mastercard, and Swift. Additionally, the company supports on- and off-ramp cryptocurrency transactions, allowing customers to exchange fiat currency for stablecoins or vice versa. 

With its extensive range of payment options, global customer base, and cross-border payment capabilities, Tazapay faces inherent risks associated with money laundering, terrorist financing, and sanctions violations. In light of these risks and the inefficiencies of its previous solution, Tazapay sought a more advanced transaction monitoring system that could streamline compliance, reduce its reliance on manual processes, and improve visibility into customer risk.

Manual solutions hold back compliance

As a rapidly growing innovator in cross-border payments, Tazapay operates in a complex regulatory environment where expectations vary significantly across jurisdictions. Streamlining compliance across diverging anti-money laundering (AML) regimes, therefore, is a front-and-center concern for Tazapay, as well as finding cost-effective solutions to help it meet its obligations effectively.

Initially, Tazapay relied on a blend of manual processes and limited in-house automation for transaction monitoring. While this approach allowed for basic compliance coverage, it became increasingly unsustainable as transaction volumes grew. 

The limitations of this manual-first approach became evident as Tazapay expanded into new markets and supported a broader range of payment channels. Key challenges facing the company included: 

• Analyzing alerts: The distribution of data across multiple locations hindered compliance analysts’ ability to evaluate alerts and customer risk profiles. 
• Alert overload: Identifying false positives relies on high-quality data – up-to-date, accurate, complete, and not duplicated. An overreliance on manual systems that could not automatically refresh data or tailor searches meant the company saw a spike in its false positive rate and a limited ability to address true positives.  
• Delayed alert escalation: Alert prioritization proved difficult with manual systems, reducing the speed of alert triage and escalation.  
• Limited customization: Tazapay could not automatically apply rules as part of its transaction monitoring, which meant compliance procedures were not tailored to its risks and suspicious transactions could be missed. 

The cumulative effect of these issues was a compliance process that could not scale alongside Tazapay’s growing business.

ComplyAdvantage meets evolving needs 

Recognizing the need for a more advanced transaction monitoring solution, Tazapay based its search on a defined list of criteria: 

• Advanced automation capabilities to reduce the risk of human error. 
• Improved efficiency via a holistic view of all customer risks on a single platform. 
• Minimize risk exposure by screening counterparties in real-time and against the most recent data. 

The company’s search for a more advanced solution led it to ComplyAdvantage’s Transaction Monitoring software, which delivers on all of these counts. Tazapay can now access ComplyAdvantage’s proprietary data, which is updated in real-time by automated systems to ensure red flags can be detected. To improve efficiency, integrated datasets allow Tazapay to view complete customer profiles on a single screen, removing the need to switch between different systems and datasets to understand customer risks in depth. 

Whereas a manual approach led to inefficient workflows, ComplyAdvantage has helped Tazapay adopt a precise, risk-based approach to compliance. Automated alert prioritization allows the company to tackle higher-risk cases first, and ComplyAdvantage’s comprehensive rules library – complemented by its self-serve rules builder – has enabled Tazapay to reduce false positives through customized transaction monitoring. 

Other decisive factors for Tazapay stakeholders were a pricing structure that delivered a strong return on investment, ComplyAdvantage’s strong reputation with regulators across different global markets, and a straightforward integration process.

The power of effective integration

With ComplyAdvantage, Tazapay now monitors transactions between its global merchants and the merchants’ customers, vendors, and suppliers. The company’s need to continue serving an international client base and growing its business made a streamlined onboarding process essential. ComplyAdvantage’s flexible, API-first integration with modular architecture allowed Tazapay to connect its new monitoring software to its existing tech stack and workflows. 

Setup took around two months from start to finish – faster than Tazapay anticipated – thanks to effective collaboration between ComplyAdvantage and Tazapay’s engineering team, with comprehensive API documentation ensuring business continuity. Since then, ComplyAdvantage’s combination of high-quality proprietary data and in-depth support with implementation has been key in upgrading Tazapay’s transaction monitoring. 

“The ComplyAdvantage team has been exceptionally responsive and proactive in addressing our questions and requests for assistance. Their willingness to go the extra mile made the entire process much smoother and I was consistently impressed by their depth of knowledge and expertise. Their insights and knowledge were invaluable and truly stood out.” 

Toh Hwee Min, MLRO, Tazapay 

Streamlined compliance and enhanced insights 

Since partnering with ComplyAdvantage, Tazapay has benefitted from real-time updates to sanctions lists and politically exposed person (PEP) data. Rather than manually double-checking the accuracy of the data themselves, Tazapay’s compliance staff receive periodic notifications from ComplyAdvantage alerting them to the latest updates. 

The new system provides enhanced visibility into transactional patterns, enabling Tazapay to track trends at both the individual customer level and across its entire customer base. This insight helps the company take proactive steps to manage risk, ensuring better case escalation and faster compliance decision-making.

For Tazapay’s compliance team, success is defined by a period-on-period improvement in the quality of their work, leading to a simplified customer onboarding experience, accurate risk identification and scoring, and effective implementation of measures to mitigate those risks. 

ComplyAdvantage’s platform flexibility has also empowered Tazapay to create customized rules that address the specific risks it faces, enabling the detection of suspicious activity with greater accuracy. Key stakeholders also appreciated the ability to easily integrate monitoring with payment screening, allowing Tazapay to immediately deal with its exposure to customer risks, particularly around sanctions, without having to move across siloed datasets and systems. 

“ComplyAdvantage’s transaction monitoring solution is exactly what we were looking for. The results have been accurate monitoring and the ability to stop specific transactions in real time. We are now confident that all transactions are screened and monitored, and we are aware of many more transactions that require further investigation.”  

Toh Hwee Min, MLRO, Tazapay 

The expanding reach and complexity of the payments industry, bolstered by new and innovative payment rails, continues to offer both challenges and opportunities to Tazapay – making smart transaction monitoring crucial in unlocking revenue opportunities while achieving regulatory compliance. 

The post Tazapay implements advanced transaction monitoring in just two months appeared first on ComplyAdvantage.

Payment screening involves analyzing a transaction for signs of criminal activity. An effective payment screening process will assess the risk level of any transaction by considering whether its value and destination represent normal financial behavior for the customer in question. It will also identify the involvement of any sanctioned or watchlisted entities or politically exposed persons (PEPs). Any red flags mean the payment can either be blocked or escalated for further review by an FI’s compliance team and reported to the relevant authorities if necessary. 

Unlike transaction monitoring, which analyzes transactions after the fact to detect underlying patterns that may indicate suspicious behavior, payment screening identifies red flags before transactions are processed, allowing financial institutions to stop them going through. 

The importance of effective payment screening 

Without a successful payment screening process in place, FIs expose themselves to the risks of money laundering and terrorist financing. On the one hand, these risks can be reputational, with firms associated with poor defenses against financial crime likely to lose customers and see business growth suffer. Some research suggests one negative article can cost businesses up to 22 percent of potential customers, a figure that increases to 70 percent with four or more articles. 

On the other hand, the risks can be financial or criminal. Regulators worldwide have implemented legislation governing payments, often stipulating payment screening requirements, with non-compliance resulting in heavy fines or law enforcement action. Key global pieces of payments legislation are: 

• The Payment Services Regulations 2017 (PSRs) in the UK. 
• The Electronic Fund Transfer Act (EFTA) in the US. 
• The revised Payment Services Directive (PSD2) in the EU. 

Common challenges in payment screening 

The essential challenge FIs face in payment screening is balancing customer experience with regulatory obligations. In a world of instant payments, customers expect seamless interactions with their bank or payment service provider (PSP) and transactions to be processed without delay. In the European Union, the SEPA Instant Credit Transfer scheme provides for instant cross-border payments, with instant payments projected to grow to €34.2 billion by 2027. When firms fail to implement efficient screening measures or experience high rates of false positives in their screening process, this inhibits their ability to deliver satisfactory customer experiences. 

Another common issue for firms is adapting to changing regulations and sanctions lists. In the current sanctions environment, which has seen a spike in new designations since Russia invaded Ukraine in 2022, firms need to be able to access the latest sanctions updates. 

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7 ways to enhance your payment screening process

Regulatory feedback for firms guilty of payment screening failures has emphasized the importance of adapting compliance programs to match business growth, ensuring they remain fit for purpose at all times. Here are seven important steps that allow firms to do this: 

1. Implement a risk-based approach

As a foundational point of AML compliance, the risk-based approach will be familiar to experienced compliance professionals. However, all firms should still ensure their approach is as efficient as possible by avoiding standardized, inflexible rules, instead undertaking regular business-wide risk assessments to identify which products or services, customers, and jurisdictions are likely to pose the highest AML/CFT risk. Firms should also have clear policies specifying when cases should be escalated for further review and when enhanced due diligence (EDD) is required. In practice, a risk-based approach could mean, for example, that firms screen transactions in different payment corridors against different datasets or apply variable levels of fuzziness in searches. 

2. Use comprehensive data sources 

Firms should screen payments against all relevant data from jurisdictions in which they operate or have significant interests. This involves checking sanctions lists maintained by governments and regulators, various adverse media sources (including both traditional and informal sources like social media), and global PEP databases. 

3. Receive updates in real-time

Access to a range of screening lists is important – but these lists will only be effective if updated frequently. Major sanctions lists, for example, often receive multiple weekly or even daily updates. Using old data means firms can take on more risk than they have planned by processing transactions that should have been flagged as high-risk. Outdated information can also cause false positives, slowing firms’ operations. For an optimal solution, firms should look for ways to receive updates to customer data in near-real time, allowing them to mitigate risks as quickly as possible. 

4. Conduct ongoing transaction monitoring

In addition to detecting the presence of high-risk parties in customer transactions, payment screening must also involve determining whether an individual customer payment deviates from how firms should expect that customer to behave. This can only be done by monitoring transactions on an ongoing basis so firms have existing records with which to compare a given payment. This allows firms to establish customer behavior patterns and flag any departures from them. Centralizing compliance activities within a single platform allows firms to integrate payment screening with transaction monitoring more efficiently and reduces the need for analysts to switch between siloed datasets and cases. 

“As a cross-border payments firm, we really value ComplyAdvantage’s payment screening solution, which was a game changer for us, allowing us to centralize our payment screening and transaction monitoring activities within one team connected to one system.”

Alessio Giorgi, Head of Compliance & MLRO, Lumon 

5. Balance security measures with user experience

On the customer side, FIs must be able to collect the information necessary to process and authenticate the payment. This may include two-factor authentication to verify customer credentials. The mechanics of this process mustn’t be lengthy or complicated enough to deter customers from proceeding with the transaction. 

Firms then need to screen the payment against the customer’s transaction history to determine whether it’s a payment they would be expected to make and screen all parties in the transaction against sanctions, PEP lists, and adverse media databases. Ideally, this should all happen within milliseconds. 

On the compliance side, an FI’s chosen payment screening solution should have an easy-to-navigate user interface (UI). Ideally, it will be easy to integrate with the firm’s existing tech stack and databases, reducing the possibility of siloed datasets and a difficult implementation process. Features such as alert prioritization and case management also improve the usability of a screening solution. 

6. Maintain clear documentation 

Regulators and auditors have high expectations of firms when it comes to record-keeping. In the event of a review, they will expect thorough documentation not only of payment screening policies and procedures but also of every decision made regarding escalated or reported transactions. Without proper attention from firms, this critical aspect of compliance can fall by the wayside, especially given the competing pressure of delivering instant payments to customers. Firms should ensure records are retained and stored accessibly to make themselves as auditable as possible. 

7. Use advanced technology to enhance screening accuracy 

Dedicated AML software leveraging cutting-edge technology can offer firms a significant competitive advantage in payment screening. Artificial intelligence (AI) and machine learning (ML), in particular, have a wide range of applications in this area, from automatically refreshing screening databases to optimizing search algorithms for a reduced false positive rate. When choosing a software solution, firms should consider their specific payment screening requirements, risk assessment, and appetite.

Automated solutions for seamless payment screening

ComplyAdvantage’s advanced payment screening solution is designed to let firms provide their customers with the best experience possible while managing AML/CFT risks. With ComplyAdvantage, firms looking to upgrade their payment screening can: 

• Cut down on false positives with risk-optimized matching algorithms and data sourced straight from regulators with natural language processing technology. 
• Process 99 percent of payments in less than half a second, supporting instant payments without compromising on risk with scalable cloud technology. 
• Receive updates to sanctions lists in under an hour, with databases refreshed using automated systems and validated by human experts. 
• Improve efficiency with integrated data, screening, and case management. 
• Customize screening processes by applying tailored lists and fuzziness levels to different payment corridors for an effective risk-based approach. 

The post 7 best practices for an effective payment screening process appeared first on ComplyAdvantage.

Financial institutions (FIs) looking to implement or upgrade their payment screening processes can benefit from the wide range of specialist software solutions available. However, with the wealth of options available, choosing between one solution and another can be difficult. 

This article provides guidance on that choice, discussing the nine most important factors firms should consider when choosing their payment screening software. 

What is payment screening software? 

Payment screening is an essential solution for any payment service provider (PSP) to help them meet their anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. It helps firms detect whether an individual payment carries a risk of money laundering or terrorist financing, allowing them to place the transaction under further review or block it if necessary. 

To carry out effective payment screening, firms rely on payment screening software: specialist technology that verifies information relating to a given payment and analyzes it for any sign of AML risks. Selecting the right software is essential for firms to process instant payments at scale while guarding themselves and their customers against financial crime. 

Payment screening software works by gathering and validating the necessary information about a payment, before assessing it for any AML/CFT risks and checking it against data relating to sanctions and politically exposed persons (PEPs). Real-time payments are likely to change the way firms expect to screen – under new SEPA rules, for example, banks and PSPs must screen their customer base for sanctions at least daily, since screening each individual payment would take too long. However, firms will still need to apply payment screening to transactions heading outside SEPA. Firms need a flexible system that allows them to screen payments whenever necessary; while most firms surveyed for our State of Financial Crime 2025 report said they were confident of meeting SEPA requirements, they needed to upgrade their teck stacks and personnel to do so. The diagram below explains how ComplyAdvantage Payment Screening works: 

Why is payment screening important for AML?

Payment screening is one of the key tools in any FI’s AML arsenal, helping firms prevent illegitimate transactions from being completed. Given the dominance of instant payments in the contemporary financial landscape, effective payment screening can prevent financial crime in real-time. 

PSPs across most jurisdictions are subject to AML/CFT regulations designed to ensure firms have measures in place to prevent them from processing funds derived from criminal activity. If firms aren’t sufficiently protected, they risk exposing themselves to crimes such as money laundering, terrorist financing, sanctions evasion, or fraud. If this happens, they can suffer the consequences of regulatory non-compliance, which range from reputational damage to financial and criminal penalties. 

9 tips for choosing your payment screening software

1. Understand your business requirements

AML compliance is built around the concept of a risk-based approach: that all compliance programs will look different because firms all have unique needs. This is no different when it comes to payment screening processes and the software used to execute them. Firms should assess each potential solution on its suitability for the payment options they offer and the customers and jurisdictions they serve, all of which affect the data they need for payment screening. 

Firms will always have multiple interests to balance: Aside from compliance issues, reputational, operational, and performance considerations will also influence software choices. Customer experience, growth objectives, and workflow optimization will all be factors. 

2. Consider your regulatory obligations

While every jurisdiction has its own AML/CFT legislative framework, they typically conform to the Financial Action Task Force (FATF)’s international standards, known as the ‘40 Recommendations’. FIs should consult the regulations they are legally obliged to follow, but generally, they will include these key points. 

In addition, PSPs are subject to payments-specific legislation, which mandates them to have payment screening processes in place. Examples include: 

• UK payments regulations: The Payment Services Regulations 2017 (PSRs). 
• US payments regulations: The Electronic Fund Transfer Act (EFTA). 
• EU payments regulations: The revised Payment Services Directive (PSD2). 
• Singapore payments regulations: The Payment Services Regulations. 

Firms should check that their payment screening software is equipped to comply with these regulations and allows them to access the relevant sanctions lists for their jurisdiction. Regulators will expect firms to explain their choice of software and details on how it helps them achieve compliance requirements. 

3. Select a solution that is accurate and efficient

FIs should ensure they understand the specific features of a payment screening solution and check it aligns with their needs. An effective solution will draw on comprehensive, correct, and complete data. Firms should also verify that the solution can accurately screen payments against this information to detect true positives and minimize false ones. For example, matching algorithms can account for variants in spelling or global naming conventions, while FIs should also be able to adjust search parameters to screen only against relevant data. 

It’s also important to remember that AML regulations, sanctions lists, and PEP data are all subject to change. This makes customer risk profiles dynamic, not static. FIs should ensure their chosen software gives them access to the latest information, ideally with automated updates that give them new information in near real-time. 

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4. Make sure the solution integrates seamlessly with your existing systems

Siloed data and systems can greatly hinder compliance processes, compromising the ability of compliance teams to view all the data they need when responding to alerts. If payment screening software can be integrated with an organization’s existing tech stack, then this significant barrier to compliance is removed. Application programming interfaces (APIs), or software that allows two systems to communicate more easily, are the best way of ensuring integration and unburdening firms from siloed data. 

5. Test the solution’s usability

Even if a payment screening solution excels on paper at providing technical compliance, this will count for little unless it can be easily used in practice. Firms should check what implementation aids are included – such as guides, FAQs, and other supporting documents – as well as access to ongoing support and troubleshooting from the vendor. The availability of sandboxes, so firms can test out risk models and screening configurations, can further validate the fit between the software and the company. 

Firms should look for specific software features indicating a positive user experience. Consolidated data and customer profiles, automated customer and event risk scoring, alert prioritization, and accessible customer and case documentation to help firms establish an audit trail are all good examples. 

6. Make sure the solution covers data security and privacy needs

Compliance leaders should prioritize information security when assessing potential solutions, given the volume and sensitivity of the customer data involved in payment screening. Enterprise-wide risk assessments should include data security and privacy issues, and firms should have strategies to resist cyber attacks and ensure maximum business continuity in case one does occur. Any payment screening software a firm adopts should conform to these and not unnecessarily add to a firm’s existing security risks. Firms should also be aware of their privacy obligations under regulations such as GDPR and check with vendors to ensure their solutions can accommodate them. 

7. Consider the cost-effectiveness of the solution 

Budgets, timelines, and KPIs should all influence how FIs choose their payment screening software. Larger firms willing to invest significant time and resources into the process need to be sure they receive an enterprise-grade AML solution, which lower-cost options are unlikely to provide. For smaller firms with ambitious growth plans, scalability is an especially important consideration. Choosing a solution that works now, only to have to jettison it a year or two down the line, will not prove cost-effective in the long run. 

8. Evaluate the vendor’s reputation 

Generally, firms have two primary ways to assess a vendor’s reputation. First, they can review client lists and case studies provided by the vendor, which offer evidence of successful outcomes and the vendor’s experience with similar clients. Second, firms can seek external validation of the vendor and its product, which may come from industry research and review platforms, like Chartis or G2, or certifications from standards boards such as ISO.

9. Ask for demos or tests 

Successful relationships between software vendors and FIs are built over time. Firms should consider whether off-the-set rulesets or more customized solutions better suit their specific requirements. Vendors should be able to advise firms on specific implementation points and help them refine their use of software for an optimized payment screening process. Demos and sandbox-based testing are good ways to establish a basic fit between product and firm and test it against these criteria. Committing to the wrong payment screening software without trying it out first will prove an expensive mistake for FIs.  

Improve efficiency with advanced payment screening solutions

ComplyAdvantage’s Payment Screening solution balances cutting-edge compliance features with enhanced efficiency measures, allowing firms to achieve higher straight-through processing without compromising on risk. FIs looking to process payments securely and instantly at scale can enjoy features such as: 

• Processing times of under half a second for 99 percent of payments: With only milliseconds required to complete transactions, ComplyAdvantage payment screening supports any instant payments scheme, including SEPA, FedNow, and Faster Payments. 
• System-wide sanctions updates in under an hour: Our technology, enhanced by artificial intelligence (AI), monitors regulators and other authorities directly for updates rather than waiting for delayed official announcements. Our global analyst team oversees data refreshes to ensure only the right updates are made. 
• Tailored screening: Firms can screen for any attribute, including names, BIC codes, and countries (including unstructured text fields). They can also apply tailored lists and search fuzziness levels to different payment corridors. 
• Fully integrated data, screening, and case management: With flexible, efficient workflows, compliance teams find it easier to review and take action on cases in good time.  

The post 9 tips for choosing the best payment screening software for AML appeared first on ComplyAdvantage.

An effective payment screening solution is critical to meeting this challenge. Payment screening allows financial institutions (FIs) to detect anti-money laundering and countering the financing of terrorism (AML/CFT) risks associated with a given transaction. This article explores five ways firms can use payment screening to power secure, efficient cross-border payments. 

1. Use real-time risk intelligence 

Any payment screening solution will only be as good as the data it operates on. An essential stage in the payment screening process is identifying any possible matches between the sender or receiver and sanctioned entities or politically exposed persons (PEPs). For this to happen, firms must have access to up-to-date data. 

Keeping pace with ever-changing sanctions lists is a particular issue for firms – particularly in the current geopolitical landscape. Any delays in receiving updates to sanctions data leave firms vulnerable to compliance breaches by inadvertently processing transactions with sanctioned entities and the resulting regulatory penalties. 

Firms should look to implement a payment screening solution capable of delivering real-time updates, a feature made possible by using machine learning (ML) to monitor sanctions lists continuously without relying on manual checks. This is particularly important given that legislation around new instant payment rails, such as the 2024 SEPA Instant Credit Transfer regulations, state that payment service providers (PSPs) should screen customers against sanctions lists at least daily, enabling them to facilitate real-time payments more effectively. This only makes access to the latest data more crucial for firms. 

2. Adopt tailored screening for a risk-based approach 

The risk-based approach – which involves tailoring compliance policies and internal controls to the specific risks a firm is likely to face and its appetite for taking on risk – is a cornerstone of AML compliance. This is because it can help firms balance regulatory obligations with business goals by guiding where resources should be allocated to mitigate risks. When assessing firms’ compliance programs, regulators and auditors will look for evidence of a risk-based approach. 

Implemented effectively, a risk-based payment screening solution can identify AML threats without unnecessarily impeding payments (and deterring customers) with needless delays or a one-size-fits-all solution. 

There are a few steps firms can take to make their payment screening efficient and risk-based. One is adapting screening searches based on jurisdiction and applicable regulations: screening against irrelevant sanctions lists is one clear example of regulatory ‘over-compliance’ that can slow down payment processing. FIs can also adapt their screening settings based on the level of due diligence required – for example, by altering the fuzziness of searches to cast a wider or narrower net. 

3. Get a holistic view of risk 

Compliance analysts risk overlooking critical information without a clear, consolidated view of cases and alerts, which impedes their ability to make decisions on cases and increases resolution times. Firms should, therefore, ensure that their understanding of transaction risks is as complete as possible, particularly when assessing risk factors across multiple jurisdictions. 

From an analyst’s point of view, a single view of transaction risks allows for smoother, less fragmented decision-making while screening against multiple data fields related to a payment – such as party names, bank identification codes (BICs), and payment references – can increase risk visibility. 

Firms should also consider using separate vendors to meet different compliance needs or consolidate their compliance tools. Solutions that allow firms to integrate payment screening with other AML processes, such as customer screening or ongoing transaction monitoring, will allow them to fully understand the risks attached to a payment and remove the need for analysts to switch between different datasets and user interfaces when assessing cases. 

4. Balance security with transaction speed 

The rise of instant payment services such as SEPA ICT in the European Union or FedNow in the United States has increased the pressure on firms to cut down on transaction processing times. Under the SEPA ICT regulations, firms must deliver payments within ten seconds; in reality, consumer demand means ambitious firms will aim for timelines closer to a few milliseconds. 

Screening systems that take longer than this to assess most payments lead to delays that hinder both customer satisfaction and compliance performance due to increased pressure on analysts. These backlogs may also lead to non-adherence to processing service level agreements (SLAs). 

Firms should prioritize a payment screening solution that can process transactions without delay. In part, this comes from keeping false positive rates as low as possible. Tailored rules and configurable screening can help firms with this. Precise matching algorithms that use natural language processing to account for factors like variations in spelling or global naming conventions are also particularly important when firms are processing payments to and from multiple locations. FIs should also choose one that supports multiple international instant payment corridors to attract and retain as many customers as possible. 

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5. Optimize compliance workflows 

Internal compliance processes can make or break many aspects of firms’ payment screening performance. Broken workflows make it harder for teams to take quick and decisive action, for example, where data or case decisions are stored via manually updated spreadsheets or other internal documents. When it comes to screening software, usability features that can enhance teams’ operational agility are as important as high-quality data or support for instant payment corridors. 

Ideally, solutions should include strong case management capabilities, allowing compliance teams to access user insights and a comprehensive audit trail. Solutions that capitalize on leading-edge technology can be a difference-maker for firms here. ML can speed up lower-risk work so compliance officers can apply their expertise to higher-risk tasks via automated event and customer risk-scoring features. Automated case decision records allow analysts to access a comprehensive audit trail, while insights and performance dashboards can help firms understand and improve the effectiveness of their compliance programs. 

Advanced payment screening for firms processing cross-border transactions

ComplyAdvantage Mesh Payment Screening is designed to safeguard cross-border payments without compromising on transaction speed. Firms can process payments faster to stay ahead of regulatory requirements and build customer loyalty with product features including:

• Real-time sanctions updates: Receive system-wide updates to sanctions lists in under an hour, with information sourced directly from regulators and refreshed using automated systems. 
• 99% straight-through processing success rate: Screen and process payments in under half a second with a solution that can support any instant payment type or corridor. 
• Advanced screening configurations: Choose specific sanction sources to screen against, apply different levels of fuzziness to different searches, and screen against various fields such as payment parties, payment references, and BICs. 
• Unified risk management: Gain a consolidated view of all alerts for any given case and improve analyst productivity with alert muting or whitelisting capabilities to minimize wasted time. 
• Client-ready API documentation: Enhance compliance team workflows via an easy-to-implement screening solution and configurable case workflows. 

With ComplyAdvantage Mesh, firms can integrate their customer screening with other AML capabilities via a single API. Mesh centralizes compliance elements that are usually split over different systems, giving businesses a 360-degree view of their financial crime risk. It also comes with interactive, pre-configured dashboards that allow firms to gain insights into key risk and performance metrics. 

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• What payment screening entails.
• Why it can pose significant challenges.
• How technology can help.

What is payment screening?

Payment screening is the process of analyzing, verifying, and validating every incoming or outgoing transaction. Its purpose is to understand the risk of impropriety or criminal activity in any given payment. By screening payments, FIs can rapidly decide whether to escalate a potentially illicit transaction or allow a legitimate payment to go through.

This allows firms to remain compliant with anti-money laundering and counter-terrorist financing regulations (AML/CFTF) worldwide while protecting their customers and themselves from criminal attempts to siphon money or abuse payment rails. Because of this, FIs of all sizes must be able to screen every type of digital payment, from standard credit card transactions to faster payment schemes like FedNow and Instant SEPA credit. In our State of Financial Crime 2025 survey, 100% of businesses said they were confident about meeting SEPA requirements – but only with significant overhauls of their tech stacks and personnel. 

The difference between payment screening, transaction monitoring, and transaction screening

Transaction monitoring refers to all the activities an FI undertakes to observe, record, and respond to customer interactions with its services. Transaction screening looks at individual transactions, such as payments, before they’ve been approved to stop especially high-risk activity. Payment screening is a facet of transaction screening, but it only deals with payments before they are processed. 

Each screening process involves similar steps but can vary based on the specific risk factors involved in the transactions being screened. 

Payment screening regulations

Payment screening is necessary because FIs worldwide are subject to many regulations and recommendations to tackle criminal activity like money laundering, terrorist financing, and fraud.

These regulations vary between jurisdictions, but they invariably require that firms demonstrate a capacity to monitor and screen payments. Prominent regulations include:

• The Second Payment Services Directive (PSD2) in the EU
  An integral European regulation established in 2018 for electronic payment services, PSD2 aims to improve the conditions for more consumer choice while simultaneously reducing fraud. The call for Strong Customer Authentication (SCA) is central to its directive.
  Notably, the UK remains aligned with the guidelines and recommendations in PSD2 to maintain steady relations with the EU.

• The Electronic Fund Transfer Act (EFTA) in the US
  Several federal agencies, including the Securities and Exchange Commission (SEC), Federal Deposit Insurance Corp (FDIC), Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), as well as state-run agencies, oversee the regulation of financial activity in the US.
  However, EFTA has played a central role in establishing the rights, responsibilities, and liabilities of consumers and those who offer payment services.

• The Payment Services Regulations 2017 (PSRs 2017) in the UK
  This primary legislation governing payment services in the UK aims to improve consumer protection and competition among FIs. It’s changed the requirements for client documentation, communicating with clients, and offering assistance to victims of fraud.
  In line with the EU’s calls for SCA, the Financial Conduct Authority (FCA) set out further rules for banks and payment service providers in 2021 that establish this requirement.

• Regulations on the supervision and administration of nonbank payment institutions in China
  Coming into effect on May 1, 2024, new regulations will bring modern digital payment providers under the scrutiny and rules of the Ministry of Justice and the People’s Bank of China (PBOC).
  The rules aim to strengthen user information protection and the general protection of users in light of the recent popularity of hundreds of new payment services and providers in the region.

Common risks associated with payments

Some common issues to look out for when processing payments include:

• Identity theft: This is when a criminal steals personal information and banking details to make purchases online, masquerading as an institution’s customer.
• Friendly fraud: This is when a customer uses their own card to make a purchase but then disputes the charge with the FI without a legitimate reason to do so.
• Authorized push fraud: This is when criminals coerce or manipulate victims into depositing money into their accounts through unscrupulous means.
• ‘Clean’ fraud: This is when a criminal uses customer credentials to make a purchase but then uses stolen payment information to evade fraud detection protocols. It’s particularly hard to detect.
• Money laundering: This is when a customer or criminal makes payments as part of a larger conspiracy to obfuscate the origin or destination of money in a bid to make that money seem legitimate.
• Terrorist financing: This is when a payment is made to a specific party for the purposes of financing terrorist activity while disguising itself as a more innocuous transaction.

The core elements of a payment screening process

An effective payment screening process involves coordinating several different components. These include:

• A clearly-defined risk-based approach (RBA): As is the case with all anti-money laundering and counter-terrorist financing (AML/CTF) efforts, firms need to translate their risk tolerance into clear policies and procedures. Both what needs to be done and the thresholds beyond which this might change need to be laid out in explicit detail.
• Clean, up-to-date, connected data: To ensure optimal screening decisions are being made at scale, businesses need the data informing those decisions – customer histories, third-party inputs, sanctions data – to be reliable. This is particularly essential when trying to automate the payment screening process but just as vital for escalations.
• Updated employee training: Whether they’re implementing automation in the screening process or handling exceptions when they arise, employees need to be routinely trained in the most relevant procedures, scenarios, and regulations. It’s equally important that this training is constantly updated and aligned with the firm’s risk-based approach.
• Intuitive, intelligent technology: Payment screening software needs to update as rapidly as data feeds do while still being intuitive enough to ensure compliance teams can manage cases at speed. This requires a combination of automation and interface design.
• Continuous auditing processes: To continue improving the payment screening process, firms need an independent function dedicated to auditing every aspect of it. The goal should be to identify weaknesses, suggest changes, and oversee the prompt implementation of these improvements.

How does the payment screening process work?

Once the initial payment message has been sent or received, the payment screening process begins. The diagram below details how ComplyAdvantage’s payment screening solution works, and the process can be broken down into five distinct stages.

Stage 1: Customer authentication and data verification

During the initial stage of a transaction, it is essential to gather all relevant data related to the payment message for validation. This includes the transaction amount, information about the sender and receiver, their respective locations, and any other essential details required for the payment to proceed smoothly.

Similarly, it’s important to verify the authenticity of the customer credentials to ensure that only legitimate transactions are processed. Therefore, both sets of data need to undergo a rigorous authentication process backed by robust technology and security protocols to minimize the risk of fraudulent activities.

Stage 2: Risk-based customer due diligence

Next, a risk assessment needs to be conducted to determine the probability of criminal activity based on the various degrees of customer due diligence outlined in the firm’s risk-based approach and how they apply to the specific customer in question.

This involves an evaluation based on the customer’s previous patterns of transacting, generalized patterns in historical data that indicate crime, the jurisdictions in question, and any other notable suspicions.

Stage 3: Sanctions, watchlist and PEP screening

Then, businesses need to scan sanctions lists, watchlists, and politically exposed person (PEP) lists (maintained by regulators worldwide) to identify potential matches with the sender, receiver, or related organizations.If the payment is legitimate, these initial checks should take only a few milliseconds. However, if there is any indication of illegitimacy, then the case must be escalated.

Stage 4: Escalation

If any of the preceding three stages raises a red flag that warrants further review, businesses will then escalate the payment in question to a dedicated team that specializes in conducting enhanced due diligence (EDD) processes. If this specialized team agrees that the payment is suspicious, it may be declined at this stage. However, after further review, the payment may be approved for processing.

Stage 5: Reporting

Finally, if a payment, sender, or receiver is flagged as suspicious, the firm needs to supply the corresponding documentation to the relevant authorities immediately.

More importantly, businesses also need to maintain regular and detailed records of all these stages regardless of the outcome of any investigation for auditability and collaboration with regulators.

The challenges of payment screening

Payment screening helps FIs overcome some serious risks. However, given the complexity of all the moving pieces involved in these procedures, it brings unique challenges, including:

• Speed: Through the lens of customer experience, the biggest challenge with payment screening is that it threatens the speed at which customers can get what they want. The value proposition for digital financial services is increasingly about convenience, so legitimate payments need to be validated in milliseconds.
• False positives: Operationally, one big challenge compliance teams face with payment screening is being swamped by false positives. Inadequate screening errs on the side of caution and stops even mildly suspicious transactions, but this overburdens the compliance team and severely hinders most customers’ experience.
• Staying up-to-date with sanctions lists: One of the biggest challenges for payment screening is to be able to continuously update watchlists, sanctions lists, and PEP lists from around the world. A fast screening process is ultimately no better if it’s unable to keep up to date with the latest developments in international crime.
• The complexity of the process: For the compliance teams escalating and reporting on cases, payment screening can create a convoluted workflow, given the number of moving parts involved. Professionals can quickly become tied in knots between disparate data feeds and applications for cases, relationships, and reporting.
• Maintaining auditability: At a regulatory level, payment screening presents firms with an additional challenge in terms of documentation. Ideally, every step is naturally recorded and made available for later review. But in reality, many firms struggle to provide the kind of transparency auditors need.

The importance of technology in payment screening

Given these challenges, firms must leverage advanced applications of technology like artificial intelligence (AI) and machine learning (ML) to automate and scale aspects of their AML payment screening processes. By automating fundamental steps like customer authentication and sanctions screening, firms can come closer to that necessary balance between speed and security.

Even when cases are escalated and need manual review, software can play an integral role in providing compliance teams with an intuitive workflow for rapidly managing anomalies.

Similarly, software can help teams document the necessary parts of each screening process so that they don’t have to undertake additional retrospective effort when reporting to regulators.

Payment screening with ComplyAdvantage

FIs of all sizes rely on ComplyAdvantage for intelligent, swift payment screening at scale. The platform uses a proprietary search matching algorithm to extract the full name and date of birth (if available) of the entity to be screened against an up-to-date and human-validated sanctions database. Firms can customize the payment screening platform to screen any entity, not just the counterparty, as long as a unique identifier is provided. 

Among the top benefits experienced by firms using Payment Screening by ComplyAdvantage include:

• The ability to process 99 percent of transactions in under half a second through the use of data-optimized screening algorithms, cloud technology, and integrated data and case management.
• Reduced false positives using risk-optimized matching algorithms, allowing compliance teams to focus on real threats.
• System-wide updates every hour based on market-leading data from human-validated sanctions lists, watchlists, and PEP lists, even during crises.

The post What is payment screening? A complete guide appeared first on ComplyAdvantage.

But what’s involved in effective transaction screening? How does it differ and overlap with a firm’s overall compliance process? And how can up-to-date technology enable it?

Discover the ins and outs of transaction screening, what separates it from transaction monitoring – and the best way to ensure an effective process.

What is transaction screening?

Transaction screening analyzes transactions for suspicious or prohibited activity before they are approved. If analysis confirms illicit or excessively risky activity, the transactions are stopped. This is necessary to filter out blatant attempts to get around regulations such as international sanctions. It also contributes to a layered, risk-based approach to AML/CFT due diligence.

Transaction screening vs transaction monitoring

Transaction screening looks at individual transactions, such as payments, before they’ve been approved to stop especially high-risk activity. For example, a transaction to a sanctioned entity or for prohibited goods can be denied regardless of the customer’s past activity. 

On the other hand, transaction monitoring analyzes transaction patterns for suspicious activity after they’ve been approved. Some transactions may not be obviously high risk on their own and pass the screening process. Yet, if they are part of a wider network of suspicious activity, their relationship to past transactions can alert monitoring teams to investigate further.

Transaction screening vs payment screening

Payment screening, while a type of transaction screening, only deals with payments before they are processed. On the other hand, transaction screening may deal with other types of transactions, from payments to cash deposits, withdrawals, and ACH transactions. 

The steps each screening process follows is similar, but can vary based on the specific risk factors involved in the transaction types being screened. 

Transaction screening and AML regulations

Regulators generally focus on a risk-based approach to AML/CFT rather than dictating tools and processes at a granular level. Still, transaction screening is a vital component of any sound program. 

Regulators require a customer due diligence program that enables firms to have sufficient customer information and to identify and report suspicious activity. Firms found to be lacking in customer due diligence can be penalized. For example:

• In the United States, the Financial Crimes Enforcement Network (FinCEN) fined a major firm $140m for failing to implement an AML program meeting the minimum Bank Secrecy Act (BSA) requirements.
• In the European Union, the French Autorité de Contrôle Prudentiel et de Résolution (ACPR) fined a firm €1.5m for failures that included insufficient customer due diligence (CDD) processes and deficient procedures for investigating suspicious payments.
• In the United Kingdom, the UK Gambling Commission fined a firm £9.4m for AML shortcomings, including a failure to establish customers’ source of funds (SOF).

A lack of sound screening could lead to CDD failures, including sanctions violations. This, in turn, could lead to regulatory penalties.

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Transaction screening red flags

When teams review transaction alerts during screening, they look for red flags that could indicate illicit or risky activity. These can include signs that the transaction:

• Is being sent to a sanctioned location.
• Involves possible illicit goods, such as dual-use goods.
• Is unusually large for the account.
• Is atypical for the account’s expected activity – such as business transactions on a personal account or vice-versa.
• In some other way falls outside the firm’s accepted risk appetite or policies.
• The sender or recipient is sanctioned or has associated negative news.
• Other parties in the payment may be associated with sanctions (e.g. the bank of the beneficiary).

Red flags are meant to be initial indicators that further investigation is needed. When analysts encounter any of the above red flags, they will generally initiate a deeper review. Sometimes, an activity that initially seemed suspect will be labeled legitimate after further clarification of the context. Other times, a payment will be confirmed as illicit (for example, if it involved sanctioned entities) – or at least high-risk enough to be stopped.

What is the AML transaction screening process?

Each transaction passes through a screening process before being approved. The exact steps may vary between institutions, depending on their policies and the tools they use. However, the process will often follow a pattern like this:

Payments that make it through the screening process are approved but are usually only looked at individually. After approval, those transactions are subject to ongoing monitoring alongside other transactions to ensure approved payments aren’t part of a larger pattern of suspicious activity. 

Transaction screening benefits

Regulators encourage firms to maintain appropriate transaction monitoring, but transaction screening is equally important owing to the following benefits: 

• Creating a barrier to criminal networks seeking to evade sanctions – It’s crucial for firms to take steps to prevent transactions that are in outright violation of regulations. 
• Reducing the number of alerts facing transaction monitoring – By stopping transactions that can be deemed unacceptable outright, payment screening teams free their transaction monitoring counterparts to investigate more pattern-based illicit activity.
• Improving compliance and risk management by implementing a multi-layer due diligence process – Effective AML/CFT depends on a coordinated, multi-layer approach from customer verification to ongoing due diligence. When calibrated according to a precise risk profile, the two-step screening and monitoring process helps firms mitigate transaction risks holistically. For this to work well, it’s essential that payment screening and monitoring teams are in communication and can alert one another of risky activity. Since each team looks at payments from a different angle, they may see things the other misses.

Transaction screening challenges

Firms can encounter transaction screening challenges related to outdated systems, unreliable or poorly processed data, and overwhelmed teams facing unrealistic screening workloads. These can include:

• Backlogs caused by false positives – When too many false positives are generated, they can congest queues and take away valuable analyst time from true positives. This translates to less accurate screening and analyst burnout.
• Unclear alert data – Analysts often face alerts that don’t clearly explain the data that triggered them. This leaves teams without the context needed to perform an adequate investigation. This, in turn, could result in too much time spent on low-risk activity – or a failure to recognize transactions that should be stopped.
• Out-of-date sanctions data – Firms may stop allowable transactions or permit illicit ones if their data is not closely synced with regulatory updates.
• Slow screening times – Firms often encounter delays of up to a day or longer processing individual alerts. This already impacts legitimate customer satisfaction. Yet with the advent of faster payments, customers will be expecting quicker processing. At the same time, ISO 20022 will mean an increase in incoming payment data. 

To keep pace, firms will need solutions that are not slowed down by inaccurate data or an inability to identify targeted risks. Even expert analysts are hampered in curbing a firm’s AML risks without adequate screening tools.

Mitigate AML risks with automated transaction screening solutions

To stay ahead of growing financial crime risks and regulatory requirements, firms must provide robust analyst support for alert investigations. This includes ensuring their transaction screening system provides clear, accurate, and comprehensive data for investigations.

ComplyAdvantage’s payment screening solution can help firms reach this goal. Using data-optimized screening algorithms, most payment transactions can be processed without delay. This is because screening lists can be tailored to a firm’s unique and changing risks, focusing on relevant risks without clogging analyst workflows with irrelevant ones. At the same time, sanctions lists are regularly updated straight from regulator sources. Firms can integrate these updates into their screening process within as little as an hour. The system supports fast payments and ISO 20022, ensuring firms are ready for the payments future.

The post What is transaction screening, and why is it important? appeared first on ComplyAdvantage.

• Accurately detects risks and explains why alerts were generated.
• Integrates across your compliance tech stack.
• Provides up-to-date sanctions and politically exposed person (PEP) data.
• Can be tuned internally without waiting on third-party assistance.

This article summarizes top payment screening vendors, how to assess payment screening software, and where key firms sit on the G2 GridⓇ for Anti-Money Laundering.

Payment screening software: 4 features to look for 

When evaluating payment screening software vendors, there are several features compliance teams should look for: 

1. Ability to manage real-time payment rails: The growth of real-time rails like SEPA Instant and FedNow means firms need a screening solution that can operate in real-time and scale as payment volumes grow. Daily screening based on managing transactions in batches will no longer be sufficient.  
2. Data quality: Geopolitical instability means sanctions lists are changing unprecedentedly. This makes the quality of vendors’ databases critical – particularly their ability to quickly and accurately update lists at short notice.
3. Effective implementation: Often overlooked in the evaluation process, an inefficient implementation can delay the roll-out of new products and/or compromise a firm’s ability to implement its risk-based approach effectively. Compliance teams should ask vendors for proof of how customers have rated their implementations.
4. Advanced capabilities: Beyond the payment screening software’s core features, what other capabilities does the vendor offer? Risk scoring, fuzzy matching, adverse media screening, and insightful data visualizations are all potential areas to inquire about.

Top payment screening software companies

1. ComplyAdvantage

The G2 GridⓇ for Anti-Money Laundering is a helpful way of measuring financial crime risk management vendors based on customer reviews. The G2 GridⓇ lists ComplyAdvantage as a leader in anti-money laundering.

Payment screening from ComplyAdvantage can be purchased as a standalone solution or leveraged as part of the broader ComplyAdvantage fraud and anti-money laundering (AML) risk detection suite. It allows clients to screen all major transaction types in real-time via a RESTful API and has four key benefits:

1. Market-leading data – We source from 140 global sanctions lists, 1200 watchlists, 244 PEP jurisdictions and monitor regulators directly for updates. Our sanctions lists are always updated so teams can screen against updated lists in as little as 60 minutes.
2. Intuitive interface – Data, screening engine, and case management are all integrated with one easy-to-use platform.
3. Support for all major payment types, including faster payments – Screening as fast as 150 to 500 milliseconds supports leading faster payment schemes (including Instant SEPA Credit, Faster Payments, and FedNow.) A single API call screens every element of a transaction in real time.
4. Configurable risk – Screen against multiple data points to avoid true positive misses for sanctioned banks or other intermediaries.

Top ComplyAdvantage Features:

• Real-time screening: Screen transactions in real-time to prevent delays and ensure efficient processing.
• Optimized algorithms calibrated to our data power fast, accurate screening flexibility, and higher straight-through processing (STP) rates.
• Tailored risk: Adjust the screening process based on your firm’s unique risk appetite and compliance requirements.
• Flexible integration: Integrate with various payment systems and data sources in batch or real-time.
• Robust reporting: Generate reports and provide insights to customers on screening results and any compliance issues.
• Flexible screening: Screen any payment attribute, including names, BIC codes, countries – even unstructured text fields.
• Customizable screening profiles: Apply tailored lists and fuzziness levels to different payment corridors – for a differentiated, risk-based payments approach.
• JSON RESTful API offers seamless integration. 
• Out-of-the-box integration with several core banking platforms.
• Flexible fuzzy logic and matching algorithms can screen using exact or approximate name matches.
• Real-time API or batch ingestion of customer transaction data.
• Comprehensive rules are set to screen transactions against sanctions lists, PEPs and RCAs, warnings & regulatory enforcement, fitness & probity, and customer-supplied lists.
• All-in-one data and platform solution integrated across the full screening stack – from data to screening and case management.

Companies that use ComplyAdvantage to screen payments include Currencycloud, Holvi, Raisin Bank, AZA Finance, and Qonto.

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2. LexisNexis

According to Crunchbase, LexisNexis Risk Solutions “provides information to assist customers in industry and government in assessing, predicting and managing risk.” Headquartered in Atlanta, Georgia, the firm has offices in 24 countries worldwide.

3. Hawk:AI

Crunchbase states Hawk AI is a “money-laundering detection & investigation platform.” Investors, including Sands Capital, DN Capital, and BlackFin Capital Partners, fund Hawk AI. It was founded in 2018 and has its headquarters in Germany.

4. Napier

According to Crunchbase, Napier is “a new breed of financial crime compliance technology specialist.” Founded in 2018 and based in London, the firm has secured investment from Crestline Investors.

5. FinScan

Crunchbase describes FinScan as providing “the most advanced sanctions list and PEP compliance solutions available to help financial services organizations.” The company was founded in 2008 and is headquartered in Australia.

How to measure success

While every firm will have different objectives and challenges with their payment screening software, success metrics should include:

• Protect the firm and its customers’ reputation. Payment screening software is critical to ensuring firms don’t enable payments to be sent to sanctioned individuals. 
• Deliver an outstanding customer experience. Customers expect to send and receive money in real-time – an effective payment screening solution can ensure AML checks are seldom the reason why this isn’t possible. 
• Effective internal processes. Intuitive workflows should allow compliance leaders to delegate resources, prioritize the greatest risks, and resolve alerts faster. 
• Integration with wider AML stack: To maximize the value of payment screening software, it should be implemented alongside other key AML programs, such as negative news screening. This will ensure a firm’s risk-based approach can be rolled out in an integrated, holistic way.

Next Steps: Explore Payment Screening from ComplyAdvantage

Discover why leading firms choose ComplyAdvantage for Payment Screening, and book a demo to see the solution for yourself.

All information sourced from publicly available websites is correct as of March 2024. If you’d like to request a correction, please e-mail content@complyadvantage.com and we’d be happy to review this with you.

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What is fraud prevention?

Fraud prevention refers to a firm’s policies, functions, and processes that keep fraud from occurring. No fraud prevention strategy is foolproof, but firms can focus on preventing the types of fraud they’re most at risk for. This will ensure they use their resources most effectively. To do this well, they can implement regular risk assessments to ensure their framework is based on realistic risks.

The difference between fraud prevention and detection

Fraud prevention and detection are complementary strategies to reduce fraudulent activity and losses. Fraud detection identifies fraudulent activity that has occurred or been attempted. It responds to an existing threat. With fraud prevention, firms implement policies and safeguards that make it harder for criminals to commit fraud. Examples include:

• Employee and customer screening.
• Customer education.
• Customers can activate card freezing and similar protections if their account is compromised.
• Transaction screening.

5 tips on how to prevent fraud

Even though a thorough fraud prevention strategy must be tailored to a firm’s unique risks, there are several facets that every firm should consider.

1. Conduct an enterprise-wide risk assessment (EWRA)

Effective fraud prevention programs must be risk-based. This entails performing regularly-updated EWRAs that analyze fraud risks based on a firm’s unique context. An up-to-date EWRA will help a firm focus on the fraud risks relevant to its operations and avoid wasted resources on low-risk typologies for their business and sector. Armed with a comprehensive understanding of its true risk, the firm can consider its risk appetite. Since risk can never be completely eliminated, a risk appetite considers a realistic and effective level of risk control that enables reasonable business to continue. 

To effectively apply its individualized risk assessment, a firm should create controls addressing its residual risk – what lies beyond the firm’s risk appetite. Specifically, fraud risks should be controlled in light of the overall risk profile, including other risky behaviors and typologies. Traditionally, firms have viewed fraud prevention as part of a process primarily aimed at reducing loss to the company and maintaining positive customer service. While these are important fraud detection and prevention aspects, they are not the whole picture. As a predicate offense to money laundering, fraud is often tied to broader criminal activity, from other predicate crimes such as wildlife and drug trafficking to money laundering and terrorist financing. To effectively combat fraud, firms must understand it in its entire context rather than viewing fraud events as isolated incidents.

All too often, fraud and AML teams operate in siloes. Yet both departments have access to information that could significantly improve the firm’s overall understanding and mitigation of its risks. For example, money laundering patterns could lead back to fraud as their source, alerting a firm to risks they may not have adequately prevented. This, in turn, could lead to better fraud prevention – and detection should activity slip through the cracks. 

2. Strengthen internal controls

Firms should take stock of their business operations in light of their updated EWRA and risk appetite. Because the risk a firm faces depends on its unique activities and structure, it is impossible to give a universally exhaustive list of necessary controls and policies. The firm must ultimately determine this as appropriate to its own operations and obligations. That said, risk-based controls and policies will share several features in common.

Internal fraud prevention

Employees can use their access to fraudulently benefit themselves or others. In more serious scenarios, those higher up in a firm can use it as a front to perpetuate their own illegal activity, which could include theft, money laundering, bribery, and terrorist financing. 

In dealing with sensitive financial information, firms should ensure they understand which duties are incompatible, meaning different people should hold them and have strictly controlled access to relevant information. This is a basic necessity for the prevention of internal fraud. According to accountants Alexander Aronson Finning CPAs, four categories should never be held by the same personnel:

• Authorization or approval. 
• Custody of assets. 
• Recording transactions. 
• Reconciliation/control activity.

External fraud prevention

Firms must ensure customers are protected from exploitation by fraudsters and that fraudsters do not open and use their accounts to perpetrate fraud. This latter scenario can cross into anti-money laundering (AML), as the two can easily overlap when the fraudster is the account owner. Policies should include processes and roles that help to mitigate this risk in line with a firm’s most recent EWRA.

Thorough documentation of processes and roles is essential to ensure the fraud prevention program aligns with risks, strategizes for the right functions and resources, and complies with any applicable laws, such as those regulating the handling of sensitive information. It’s also necessary for proper segregation of duties. Finally, it will provide a clear baseline to measure against when auditing a fraud prevention program for effectiveness.

3. Create a fraud prevention culture

No fraud prevention program will be effective if it does not permeate the firm. This means everyone should be aware of the risks associated with internal fraud and trained in basic security measures to prevent it. 

Training

Knowledgeable, well-trained staff are crucial to a well-designed fraud prevention program. Aside from hiring capable individuals, the individualized nature of each firm’s risk requires regular training. Even veteran fraud professionals will not be familiar with a firm’s unique risk landscape without continual updates. Training should be updated to align with a firm’s most recent EWRA and provide a holistic picture of fraud risks and compliance requirements.

Avoiding generic or rote programs can also help with retention and compliance. Effective training goes beyond imparting static knowledge or testing short-term memory. Instead, it practically orients fraud professionals and gives them a concrete understanding of how policies practically apply daily. Staff will then be better able to carry out more effective fraud prevention.

Anyone dealing with customer information – even if their role is not explicitly related to fraud – should be thoroughly trained to understand when customers may be at risk of exploitation. They should have a reliable chain of command to turn to when they suspect a customer may be especially vulnerable or getting scammed.

Sound governance

General awareness also needs to be supported by sound governance. To ensure fraud prevention policies, procedures, and roles are properly implemented, it’s important to soundly structure roles, from upper leadership to each team and its members. Although each governance model will be tailored to a firm’s unique risks, there are core features most programs should entail.

The three-lines-of-defense model is an industry-validated approach to governance in risk management. It provides a sound framework for firms as they determine the roles needed to respond to the risks uncovered by their tailored EWRA. PwC provides a helpful outline of what each line entails.

1. First line – These are the people in charge of the front-facing fraud prevention strategy and its associated processes. A well-developed first line should include an autonomous senior executive assigned to coordinate the strategy and processes for all first-line risk management, especially:
     •  Fraud strategy development and implementation.  •  Fraud analysis, investigation, recovery, and reporting. 

     •  Coordination between fraud prevention and related functions, especially cyber security, authentication, customer service, and broader financial crime risk management (including AML).

   This executive oversight should keep the fraud prevention and risk management function running smoothly. It should ensure all teams are working at their best with appropriate equipment and that the whole process is risk-based and integrates with wider risk management functions.

2. Second line – Those involved in the second line are responsible for establishing an objective, holistic, and well-structured picture of the company’s fraud risks. This is most reliably established through regularly updated EWRAs, which will look at financial crime risks within the context of the firm’s activities and regulatory requirements. Based on the risk profile established, this line of defense will also ensure adequate policies and procedures are in place.
   The second line of defense for fraud prevention will include the compliance team, overseeing the fraud prevention program’s compliance with company policy and, as applicable, any regulations such as privacy protection laws and any overlapping AML obligations.
3. Third line – Independent assessment and accountability are crucial to any effective risk management program. As such, the third line of defense helps hold both the first and second lines accountable by assessing the adequacy and effectiveness of their policies, procedures, and processes. This is done through internal auditing.

Firms are also well-advised to undertake third-party reviews of their risk management processes to ensure all three lines of defense are held accountable. 

4. Implement strong cybersecurity measures

Cybersecurity is key to ensuring a company’s sensitive data is not compromised, falling into the wrong hands and violating regulatory requirements. Every firm’s tech must have built-in cybersecurity measures. Firms should also train employees in basic cyber hygiene. This can prevent internal attacks such as unauthorized account access or spear phishing, where a fraudster poses as a trusted person to obtain money or sensitive information to be used in a fraudulent scheme.

Digital-native firms not operating bug bounty programs – incentive-based programs designed to stress test platforms for potential flaws – should also consider implementing them alongside frequently-scheduled pen testing exercises.

A dedicated information security team is key to effective cybersecurity. This team should be well-trained and knowledgeable in how their function can help prevent internal fraud. A firm’s fraud prevention governance policies should delineate their roles and responsibilities.

5. Establish a process for response in case of an incident

When an internal fraud incident occurs, it may be argued that the time for prevention is past. However, a swift and adequate response can help ensure the incident does not blow out of proportion. In line with their most recent risk assessment, firms should consider fraud scenarios for which they may be especially at risk. A response strategy can be outlined for each scenario and validated against industry practice. Such scenarios might include:

• Strategies for responding to an information security breach or hack.
• A chain of command and process to follow if an employee believes they’ve discovered evidence a colleague is committing fraud.

Using advanced tech: Emerging technologies for fraud prevention

The support of proper technology is increasingly vital to reliable risk management. For example, machine learning and artificial intelligence enable the detection of otherwise hidden risks. Firms can use this for fraud prevention in customer due diligence, deploying tools that implement natural language processing (NLP) for more effective adverse media checks at onboarding. 

ComplyAdvantage’s AI-powered transaction screening and monitoring solution, for example, can adapt to evolving fraud typologies, which can, in turn, help firms update their fraud prevention strategy to reflect the latest risks. Similarly, with Fraud Detection by ComplyAdvantage, firms can enhance their fraud prevention strategies as they leverage one of the most powerful machine learning models that not only detects fraud but also explains the reason why each alert was created.

Firms may consider how technology might empower anti-fraud teams to use their time and analytical capabilities better by reducing false positives and offering better insights. Even firms not yet ready for a technological overhaul can benefit from AI overlays that offer intelligent risk detection and alert prioritization to legacy platforms. Firms can also audit their existing tools to ensure they support a risk-based approach.

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