Given the ever-changing sanctions landscape and scrutiny of the regulators, how does a financial institution confidently be assured of meeting all requirements of OFAC compliance and thereby mitigate potential regulatory risk?
Compliance with the demands of an effective OFAC program burdens significant resources of financial institutions in terms of customers’ and transactions’ nonstop screening against lists of sanctions. If it were to be done manually, this process would be time-consuming and full of errors.
Compliance software solutions provide banks and other institutions with OFAC screening activities and compliance programs that are managed centrally.
Compliance software minimizes human error and reduces false positives through automated list screening of payments, wire transfers, accounts, and other transactions against the Specially Designated Nationals list and other sanctions datasets.
We will discuss What OFAC Compliance Software Options Are Available to Help Manage Regulatory Risk.
Desktop vs. Cloud-Based Software
The first choice that any financial institution will need to make concerning an OFAC compliance solution is whether it should be a desktop or cloud-based system.
Desktop software calls for approximately $50,000 to $100,000 an upfront investment in hardware, hosting the program, and data on-premise; complete control is provided, with full customization.
Cloud-based models, on the other hand, are software-as-a-service; this eliminates the need for local hardware infrastructure and reduces upfront costs. Many banks appreciate the flexibility, scalability, and lower total cost of ownership that cloud-based solutions can provide for their OFAC compliance program.
Screening vs Case Management Software
Some institutions use separate screening and case management tools to be OFAC compliant with banks, as well as their screening requirements. Screening software will allow for an institution’s process to perform an initial list check of funds transfers, wire payments, and customer data.
Case management software provides detailed research capability to the OFAC compliance team to investigate possible matches and manage resolution. Vendors like OFACassest integrate screening and case management to reduce workflow by 40%. This can be preferable for small and medium banks to keep the efficient end-to-end OFAC compliance tools running within one platform.
Bonus: With so many criteria to evaluate, choosing an OFAC compliance software provider can boil down to detailed product demos. Schedule a demo of our integrated screening and case management platform for financial institutions.
Integrated vs. Standalone Solutions
Financial entities should also consider whether they need an OFAC compliance solution that will be fully integrated into existing enterprise systems or if a stand-alone program will suffice.
Under the integrated options, the systems automatically link with core banking platforms, loan origination systems, and other programs to provide for screening across all transactional data.
Standalone systems provide compliance functionality without these deeper integrations, which may simplify the implementation for those community banks with less complex IT environments.
Choosing a Software Service Provider
Correcting OFAC compliance software requires that banks carefully consider the myriad factors critical to the support and practical, ongoing OFAC compliance program. The minimum qualifications include the reputation of a provider, experience, and certified expertise in the field.
However, institutions also look for a provider who will be committed to keeping the OFAC compliance for banks’ software current according to changes in the most current sanctions regimes and regulatory changes.
Other critical criteria include the ease of implementation, depth, and availability of support, as well as the proactive identification of any compliance deficiencies through account management and auditing tools. Finding a trusted, long-term partner is essential to ensure that an institution gets maximum value out of its investment in OFAC compliance software.
Key Features to Look For
When considering multiple OFAC compliance software, banks need to understand essential features and how they compare.
Examples of these key features include the following: configurable workflow rules, multiple list screening criteria, logging and archiving, in-application case workflow notes, built-in reporting and dashboards, and search/query tools.
Keeping in mind what is truly important will help an institution ensure it selects OFAC compliance software well-suited to an institution’s unique needs.
Popular OFAC Compliance Software Providers
Industry leaders include OFAC Systems and AML Partners, which provide full-scale OFAC compliance programs. More than 75% of all credit unions utilize one of the five most significant software providers.
Check their customer lists for indications that a prospective vendor is already serving peers in your asset size or region. Basic package prices start at upwards of $5,000 from ACEDirect; premier firms charge as high as $50,000 depending on customizations.
Advantages of Automated Software over Manual Processes
Manual sanction screening is incredibly time-consuming. According to one report, banks spend thousands of hours annually on OFAC compliance activities.
Automated OFAC compliance software can cut review times by more than 60%, freeing staff for more value-added tasks with far fewer errors than pore-through spreadsheets. This ensures productivity gains about the attention required for continuing compliance program requirements of organizations.
With growing risks associated with non-compliance, banks must be equipped with the proper tools to systemically screen for matches to sanctions and effectively manage their AML compliance programs. Click here to learn more about how automated compliance software solutions can help your institution.
