When electronic name screening was introduced in the nineties, it only involved a few hundred names. Now, however, millions of names are screened worldwide all the time and against an increasingly complex backdrop. Every time an individual makes a simple transaction – such as booking a flight, opening a bank account or even just buying a concert ticket – their identity will be checked.
We know this but why does it happen? Why are so many people being screened now? And why for even such ordinary activities such as buying a concert ticket?
Back in the nineties, the main purpose of screening was to enforce the Cuban embargo and to block transactions by drug traffickers. This meant the sanctions lists contained just a few hundred names.
Then terror attacks such as 9/11 happened and they changed everything. The shift in the political landscape meant a shift in the nature of sanctions programmes.
Now, the focus of name screening – otherwise known as identity matching – is much more about detecting terror funding and money laundering. This has led to the creation of hundreds of lists worldwide containing millions of names. These names cover anything from ‘political persons’ to ‘state-owned companies’ to ‘dual-use materials’, this last category referring to materials that can be used for civilian or military purposes.
Sanctions programmes are now an important feature of governments’ foreign policies. It’s a political tool that can be employed as an alternative to military action. Think of the sanctions imposed upon Libya during the Arab Spring, on certain African leaders, or more recently upon Russia.
What does this mean for banks and other financial institutions? It goes without saying that banks have a critical role to play in the implementation of sanctions. Authorities rely upon banks to check identities when people or organisations apply to open new accounts or when transactions are made.
Identity matching is such a burgeoning and increasingly complex field that we are running a series of articles focussed on the current and future challenges facing banks. This first post has set the scene. Later articles will cover topics such as how banks can best cope with the sheer volume of data they have to sift through and emerging trends such as the operational cost of compliance.
What’s next? We will look at the cultural context of names – how we can ensure machines are able to make accurate distinctions between names from different cultures.