Tobias Bumm/ March 9, 2020/ Uncategorized

In order to protect the financial system from abuse, measures to comply with national and international embargo regulations are required. Filter software systems and their rule sets are of great importance there. However, these must be analyzed regularly to guarantee optimal hit quality.

Business with sanctioned persons, groups or institutions is illegal under national and international law. Politically exposed persons (PEP) also pose a very high risk, if they are part of a business relationship. A thorough customer check (CDD and KYC) is therefore essential.

The information and their structure from the PEP and sanction lists are subject to constant change. A set of rules once installed does not necessarily reflect the current and entire status of the legal requirements at a later point in time. There are various attributes in screening, such as name, date of birth, or nationality that can generate an alert.

It is important to monitor the rule set for completeness and correctness in order to achieve optimal results in terms of quality (hit precision) and quantity (false positive rate) in the interaction with different filter types and strategies. How is this implemented?

A rule set analysis (RSA) for filter software systems uses automated and stochastic algorithms to read the lists, list fields and transaction attributes relevant for the tests from the database. Potential or existing test errors are then identified based on previous results. In addition, a RSA provides information on how well existing filter types and test strategies are suitable for sanction monitoring and customer screening.

In addition to the completeness and the degree of coverage of the test-relevant attributes, numerous other criteria, such as the relevance and availability of lists and list fields, play an important role in covering the test fields. The technical-qualitative analysis is also accompanied by a performance-oriented view of the rules. This ensures extensive optimization.

The quality of the regulatory framework can be determined using the following factors for reliable monitoring.

  • Completeness of the legal checking requirements
  • Relevant and updated test scenarios
  • Reliability and stability of checks
  • Accuracy and reproducibility of the results
  • Interpretability of the alerts
  • Comprehensibility of the checking scenario
  • Consistency during the use of various payment transfer systems and sources

The optimization of the rule set includes e.g. the deletion of duplicates, the adjustment of the test strategy or the standardization of the threshold values. Once a high degree of test coverage has been achieved, it is important to regularly analyze and improve the rule set to preserve the coverage and quality.

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