False Positives throwing off Compliance List Screening for OFAC Innovative Systems
Question: Is there anything that can be done to reduce the high number of false positives generated when we run our OFAC compliance list screening?
Answer: False positives (those matches that are incorrectly flagged as "hits," but upon review are determined not to be true matches) are a growing concern within today's compliance community – and for good reason. False positives increase the time and expense required for suspect review and can ultimately undermine confidence in, and usage of, a solution. In a customer file of one million records, a false positive rate of 5% means 50,000 records will need to be reviewed.
There are three key factors that can affect the frequency of false positive matches:
Data Quality Management – For efficient and accurate matching, it is important that both the customer lists and the internal or government-provided sanctions lists that are to be compared are cleansed and standardized so that the fields are consistent with each other (the "apples-to-apples" approach). Make sure that your compliance solution has the data quality capabilities necessary to perform these tasks.
The Organization's Definition of a "Justifiable False Positive" – Organizations must decide for themselves how tight or loose they want to set up the matching parameters. This decision is based on their tolerance for risk of missing a true match. The looser the parameters, the less chance there will be of missing a true match – but there will be more suspect matches to review. The tighter the definition of a valid suspect, the greater the chance of missing a true suspect match – but there will be fewer suspect matches to review.
Accuracy of the Matching Technology – Simple matching technologies are not sophisticated enough to achieve high levels of accuracy. To help ensure accuracy, a solution should be able to match on any combination of name and address fields and should be able to match despite misspellings, character transpositions, aliases, acronyms, etc.
For more on reducing false positives, download this free white paper from Innovative Systems.
Innovative Systems BoilerplateInnovative Systems has provided trusted customer data integration and compliance solutions to leading financial services organizations worldwide since 1968. Innovative's i/Lytics SECURE and eWatchLine compliance products provide customer identification, matching and suspect screening capabilities to help organizations comply with international regulations including the USA Patriot Act, OFAC, FATF, BSA, and others. Contact us at 1-800-622-6390 or visit our website at www.innovativesystems.com
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