Compliance Leaders Urge Faster Sanctions Data as Instant Payments Rise

Compliance leaders are highly concerned with the timely availability of critical sanctions data according to new global research by LSEG Risk Intelligence.

Compliance with regulations such as the EU’s Instant Payments Regulation (IPR) which mandates that payment service providers process credit transfers within 10 seconds on a 24/7 basis. play a pivotal role in driving demand for timeliness. This shift to instant transactions requires rapid and reliable sanctions screening, as even short delays in identifying newly sanctioned entities can expose firms to regulatory violations and reputational damage.

The research further indicates that false positives in sanctions and AML screening processes are common. When asked what percentage of false positives they currently experience in their sanctions and AML screening processes in a typical month, nearly a third (32%) selected 20 – 30%. A further 27% selected 10 – 20%.

David Shepherd, Global Head of Customer Risk Proposition, LSEG Risk Intelligence, commented: "Highly dynamic regulatory requirements necessitate a timely response. Reliable, up-to-date data is essential for sanctions updates and related information. However, speed alone is not sufficient; firms must ensure their data sources are reliable and trusted.

The survey also explored AI and other future trends. When asked about enhancements that would help improve their screening programme’s effectiveness and efficiency, the use of AI and machine learning tools was the most popular answer with nearly a third (31%) of respondents citing this. Of those asked, 52% said that they plan to invest in generative AI and natural language models over the next 3 years.

Commenting further, David Shepherd, said: “AI has immense potential to enhance speed and efficiency, creating seamless processes that improve customer experience. Nevertheless, it is crucial to deploy technology alongside other key elements, including trusted, comprehensive data, while maintaining human oversight and control.”

In summary, the report highlights the following key themes from compliance leaders:

• Delayed critical data updates: 50% of participants receive sanction updates after 24 hours.
• High false positives: 32% of respondents report false positive rates of 20-30% monthly.
• Need for better data: 44% of respondents believe comprehensive data coverage is crucial for addressing sanctions and AML issues.
• Future Outlook: AI/ML and predictive analytics are expected to significantly impact compliance engagement by 2025 and beyond.

For a deeper dive into the full survey findings and expert insights on the future of compliance, download the complete report here.