Avoiding breaching sanctions is been a nightmare for companies world-wide. All too often companies have had their shipment/payment stopped because they have breached some sanction. The frustration is that no-one, bank or otherwise, will tell them why. This is because, the banks and authorities reason that, if they tell the corporate what was wrong, they will somehow educate the fraudsters, the sanction busters. Delays also happen when the beneficiary seems/sounds like a sanctioned entity.
It really is a Catch 22 nightmare because if a corporate digs too deep to find out why they are told to stop, e.g. one UK finance director who was trying to find out why a payment was blocked was rung by a director of his regional bank who said, “You do not ring Bank of New York Mellon.” When he protested saying, “But they are your USD clearer which is where payment is blocked.” The bank director said, “Just don’t” and rang off. Many corporate treasury departments have similar experiences of not being able to find out what was wrong/causing the breach. The increasingly stringent regulatory demands on sanctions will only make it worse. The cost of this business discontinuity and reputational risk with suppliers and employees is huge.
Pelican Sanctions solution
The new Pelican Sanctions solution - one of the standout new products at the EuroFinance Conference last week - is designed to give the user a clear understanding of the profile (KYC) of each customer, suppliers and employees so that the risks of sending inappropriate payments to blacklisted countries, companies and individuals is significantly reduced. Company wide liquidity, financial management and business continuity is improved.
Pelican Sanctions provides a comprehensive sanctions filtering process for making payments, see figure below.
Pelican Sanctions information and workflows
Source & Copyright©2015 - ACE Software Solutions, Inc.
Using the ACE Software’s many years experience in interpreting and analysing free text, Pelican Sanctions is able to scan financial transaction,e.g. payments in real-time for all positive and negative details against any sanctions list. Functionality include:
- scans all suppliers, customer and employees and other data
- near zero ‘False Positive Rates’ (FPR) by using advanced and intuitive filtering techniques
- scanning of all message and name formats against all sanction lists
- full explanations of all decisions
- configurable dashboards and analytics
- full support for non-Latin script
- continuous self learning from previous analyses which further to reduces the FPR rates which typically are at around 1-2% which is far less than other services.
How to overcome sanction filtering challenges
Sanctions screening at a high level is very simple - it indicates whether something is a hit or not. The complexity comes into play when you do a "fuzzy" match. You can then get false hits. This causes a lot of operational overheads and costs as they these hits have to be verified individually to ensure it is not a true hit. This is also why most of the payments get delayed.
Most systems try to do the "fuzzy" matching using statistical calculations. When a threshold is reached say 80%, they say it is a hit - else not. In this way, if you have names like Fidel Smith and John Castro it would match as it found Fidel Castro in the message, or if you have an address "Tehran Strasse", it would be a hit due to the presence of city "Tehran" in Iran. However, it is actually a street address in Germany. These are not real hits, they are false positives.
This is where an intelligent approach using Artificial intelligence can help. Use of artificial intelligence and natural language processing, as done by Pelican Sanctions enable systems to process messages like humans do. WeThey use a lot of common sense - contextual knowledge to interpret the hit. So with, with natural language processing false hits like "Tehran Strasse" would disappear and operational overheads would considerably reduce. Also such a system would be able to provide an explanation why a particular word was not a hit - e.g. "Tehran Strasse" is not a hit because it is in fact a street in Berlin rather than the city "Tehran".
Also Pelican Sanctions employs self-learning, e.g. if a hit is processed as a false hit, the same should not be presented again and again. This drastically reduces the operational burden.
Finally, the sanctions systems should ideally be integrated with ERP/TMS for transaction processing and CRM/HR/Supplier management systems. So the platform should provide several easy-to-integrate options for automatic and manual verifications.
Users and charges
Pelican Sanctions has been used by banks and payment companies for many years. It is now being made available for corporates. The charges are based on the numbers of transactions processed and number of users. A large corporate treasury department can expect a cost of some $100k to $500k depending on their payment volumes over a period of five years. The systems are available as in-house systems or SaaS solutions on pay-per-use with easy connectivity.
CTMfiletake: If Pelican Sanctions filtering service works any where as well as ACE Software claim, this could be the breakthrough that corporate treasury departments are looking for. Getting rid of the blocked payments problem will cut corporate treasury department’s costs and save much hassle/aggro for corporates and banks. A win-win even.
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