AML screening frequency for existing clients – best practice vs. regulatory minimum?
I'm relatively new to the compliance side, coming from operations, and I've been wrestling with the optimal frequency for ongoing AML screening of existing clients. We currently perform annual checks, which I understand meets the basic regulatory requirements for our jurisdiction regarding sanctions lists ($OFAC, etc.) and adverse media.
However, I've heard some chatter, particularly from those dealing with higher-risk client segments or cross-border transactions, about more frequent, even quarterly or monthly, deep dives. The argument is that an annual refresh might miss crucial developments, like a client being added to a PEP list or new adverse media emerging, that could significantly alter their risk profile between those annual reviews.
From a resource perspective, ramping up screening frequency is not a trivial ask, especially for a large client base. So, I'm trying to understand the balance. Are firms generally sticking to the regulatory minimum for lower-risk clients and only escalating for specific high-risk categories, or is there a move towards more proactive, shorter-cycle screening across the board as a de-facto best practice, even if not strictly mandated? What are others in the room doing, and what's driving those decisions?
Annual checks for sanctions and adverse media are standard for many, but "optimal" really depends on your client risk profiles. Higher risk clients often warrant more frequent review, even if not strictly mandated. Have you stratified your client base by risk?