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Libyan crisis creates compliance screening headaches

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Aside from the more serious human cost, the Libyan crisis is having a knock on effect for compliance teams and their anti money laundering screening systems in all the world’s major – as well as minor – economies.

That’s the word from Bateleur Software, southern African representative for risk and compliance screening specialist, Datanomic.
For many years now, companies seeking to do business in the US, UK and EU have had to comply with stringent anti-money laundering legislation, including the Third EU Money Laundering Directive.
This directive, which came into effect in December 2007, placed rigorous information management requirements on financial services organisations to systematically screen their client base to ensure they were not unknowingly doing business with criminals, terrorists or fraudsters.
Should a firm, knowingly or unknowingly, breach this directive – or any other legislative requirements such as Basel II, MiFID, the Prevention of Terrorism Act and the UK Proceeds of Crime Act – they risk ruining their reputations and may incur hefty financial penalties and operational trade restrictions.
According to Bateleur’s Lizette Sander, the Libyan crisis is creating an increased workload for compliance teams worldwide intent on abiding by the directive. This is because Libyan leader Muammar Gaddafi’s assets have been frozen by, inter alia, the UK Treasury, the European Union, the USA and South Africa.
The key problem, according to Sander, is that many automated compliance screening systems cannot deal with the extensive Romanised variations of Libyan Arabic, such as Gadhafi, Al-Qadhafi, el-Qaddafi, Khaddafi, Gathafi and many more. This results in an exceptional amount of false positives, which have to be manually checked to ensure compliance.
“112 alternate spellings for Gaddafi and variations in the transliteration of Arabic mean that few systems are capable of automatically screening them all,” she says. “Banks, insurers and investment firms worldwide therefore have to employ additional resources to research and investigate mountains of data, increasing the risk of a sanctions breach through poor screening systems.”
Effective, accurate screening of data held in foreign alphabets requires a complex blend of transliteration, transcription and translation. Today’s multicultural society and the fact that companies trade globally and hold data in foreign alphabets like Arabic, Chinese, Hangul (Korean), Cyrillic and Japanese (Katakana, Kanji and Hiragana) creates a headache for compliance teams who need to screen against the international watch lists  – such as OFAC, HMT, EU, UN – which all contain Latin data. The result is a far greater compliance workload to investigate potential matches manually, increasing complexity and operational cost.
To address this, Datanomic's dn:Sentry Customer Screening system allows effective transliteration and equivalencies matching against 45 different language scripts, handles multiple input alphabets simultaneously, and provides a solution for name variance screening even when data is held in native script.