A major UK retail bank was interested in assessing how effective their customer sanctions screening system was at identifying sanction list names should they occur in their customer base.
An independent review of Sanctions Screening Systems is recommended and mandated by regulatory and industry bodies.
The bank approached SQA Consulting knowing that SQA had a proven track record of undertaking screening system reviews that would provide the independent assurance the bank was seeking.
SQA Consulting regularly tests sanctions screening systems for large and small Financial Institutions worldwide, providing assurance on the effectiveness of the screening system.
To satisfy this requirement, we could use our in-house Screening Assessment Centre (SAC) software to generate a test file to assess the effectiveness and efficiency of the bank’s sanction screening engine.
SQA Consulting’s automated SAC software enabled us to test every name from all the screening lists used by the bank. Furthermore, it allowed us to include an extensive number of fuzzy matching scenarios to determine the limits and capabilities of the screening system, rapidly creating a very comprehensive test pack of some 100,000 test cases. On completion of testing, SQA presented a quadrant diagram, as shown below, plotting the screening engine’s screening effectiveness at identifying name matches vs screening efficiency of finding unnecessary/false-positive name matches. This allowed the bank to assess how its screening system performed against peer benchmark comparisons.
The blue dots represent comparison benchmark results for similar screening tests conducted at various other Financial Institutions. The red dot is the test result for the bank’s own screening system.
The results showed that the bank had a highly effective screening solution, significantly higher than peer benchmark comparisons, though this came at the expense of also being significantly less efficient with far higher false-positive match numbers.
The bank had a risk-averse strategy, that provided a strong sanctions defence but also produced a high proportion of false positives compared to their peers. This result was in line with their business strategy and SQA’s review was able to confirm for the bank that their screening system was operating successfully in line with their expectation.