Core Pillar #5: The Important Sanctions Screening Effectiveness Testing 

Posted in Sanctions Compliance on December 5, 2023
Sanctions Screening Effectiveness Testing

The sanctions screening effectiveness testing is performed to assess the effectiveness of the sanctions screening process implemented, and to prevent the occurrence of sanctions risks. A comprehensive, independent, and objective testing of the sanction compliance program, is part of the compliance program of the organization. It ensures that organizations are aware of the effectiveness of their sanction compliance program and related controls, and know gaps in the sanction compliance program, for rectification purposes. 

Sanctions Screening Effectiveness Testing

Sanctions Screening Effectiveness Testing 

Testing activity is a planned and periodic activity, performed by independent and knowledgeable parties, including the sanction compliance team. Testing of sanction compliance programs and activities is performed to enhance, the sanctions compliance risk assessment process, because testing results identify gaps and issues in the processes, that are used while performing a sanctions risk assessment. 

Testing, whether conducted on a specific element, such as testing whether all customers’ names are screened from the sanction lists, or at the enterprise-wide level, are important tools to ensure the sanctions compliance program is working as designed. The organization is committed to ensuring that the testing results are reported to senior management, for their review and necessary feedback.  

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The organizations are committed to ensuring that they employ periodic sanction compliance program-related testing procedures, appropriate to the level and sophistication of the overall compliance program. Testing expertise may be deployed internally or may be performed by an external party, to reflect a comprehensive and objective assessment of the organization’s sanctions risk assessment process and internal controls. 

The organizations ensure that, upon learning of a confirmed negative testing result of the sanctions compliance program, they will take effective and timely actions, to the extent possible, to address the issues through the implementation of compensating controls, until the root cause of the issues is determined and remediated.

Sanctions Screening Effectiveness Testing

Final Thoughts

Sanctions screening effectiveness testing is intended to speed up testing and offer targeted information rapidly. Determine the screening systems’ limitations and strengths, as well as the actual screening effectiveness. It complies with regulators’ recommendations for screening system testing and collects supporting metrics. This solution assists financial organizations in understanding the performance of their screening system by testing the system and then delivering attained effectiveness and efficiency data. Using Sanctions Testing, financial institutions will be able to identify the system’s shortcomings and strengths on a regular basis, as well as the influence of configuration changes on screening effectiveness.