Sanctions Alert Classifier

KPMG offers a new approach to your sanctions compliance using deep industry knowledge and solutions that combine and increase efficiency and effectiveness.

The pressure from financial crime is not new, but it is growing. The current challenge for banks is a combination of ever-growing and evolving regulations and laws. These create a complex regulatory environment. A compliance system that is Incorrectly set up or inefficient is therefore no longer an option.

Existing sanctions screening systems result in a large proportion of false alarms, often exceeding 95%. Established optimisation techniques applied to such systems require constant updating due to the increasing number of payments and clients, the introduction of new sanction schemes as well as frequent changes to existing lists. The constraints due to poor system reconciliation and regulatory changes have led to alerts and backlogs in many institutions.

The review process for current alerts often requires large teams of staff, often spread across different geographical locations. Delays in transaction processing due to staff turnaround times can impact customer satisfaction, which is increasingly at the forefront of financial institutions' strategic agendas.

In the face of increasing and changing regulations, rising transaction volumes and the introduction of new sanctions regimes, KPMG has developed solutions that achieve both system optimisation and alert verification. The aim is to increase the quality of the performance of the early detection systems and to ensure a faster, more accurate and more consistent review of alerts, which will help financial institutions to comply more efficiently with their sanctioning obligations.

The KPMG Sanctions Screening Testing Platform enables clients to test the effectiveness of their customer and/or payment verification systems.

• The sanctions screening platform has the option of using lists from regulatory authorities, third-party providers or internal lists of the client. The audit approach can follow KPMG's proven standard methodology or be tailored to the risk determined by the client.
• The results are analysed with the client to determine the cause of the false alarms and identify ways to optimise their screening solution.
• Files are created in minutes instead of days, with built-in proof of verification and lists to determine the accuracy of test file composition.

Infographic on the Sanctions Screening Testing Platform

The Sanctions Screening Testing Platform provides a robust and verifiable way to test the effectiveness and efficiency of the screening system while reducing human error and system review costs.

The KPMG Sanctions Alert Classifier automates decision-making in the first line of defence. It can provide 99.998% accuracy in decision making for alarm verification with 0.001% deviation. Decisions about alerts can be made more quickly and with a consistently higher level of accuracy while reducing costs.

• Using advanced machine learning techniques, the tool automates the identification of “positive" and “false positive” Level 1 alert messages at a rate of up to 1 million alerts per minute. The tool can be used with all sanction screening systems currently on the market.
• Every decision to review alerts has a confidence level and is supported by a basis for decision-making that is visible to the analyst. Clients can therefore customise the use of the tool to set coverage and accuracy rates that support their risk appetite.
• The use of supervised machine learning ensures that the tool is transparent and can be independently checked by auditors and regulators.

KPMG has combined expertise in financial services, sanctions and technology with leading data science experts to develop advanced technology solutions for sanctions audit systems. Significant benefits include:

• System effectiveness - Fewer alerts resulting in less effort for monitoring teams.
• Increased and constant accuracy - 99.9% accuracy for alert results based on millions of SWIFT messages versus an average human verification accuracy of 92%.
• Regulatory compliance - Automated "true" positive detection enables faster escalation of high-risk cases to Compliance. The processing power of up to 1 million alerts per minute prevents the build-up of backlog and effectively addresses a high number of alerts.
• Cost reduction - The automated percentage classification of Level 1 alerts of up to 96% of the generated alerts minimises the requirement for a 4-eyes review.
• Customer satisfaction - Timely review of alerts reduces the delay in processing transactions and thus promotes customer satisfaction.