When does name screening typically occur?

Name screening typically occurs during the onboarding process and on an ongoing basis to ensure compliance with anti-money laundering (AML) regulations and to assess risks associated with customers. During onboarding, financial institutions verify the identities of their customers and screen their names against various watchlists, such as those for sanctions, politically exposed persons (PEPs), and other risk indicators. This initial screening helps prevent illicit activities and ensures that the institution does not engage with high-risk individuals or entities.

Ongoing name screening is equally important, as customer risk profiles can change over time. Financial institutions are required to continuously monitor their existing customers for any changes that could affect their risk status. This includes screening for new sanctions lists or adverse media reports that may arise after the customer’s initial onboarding. Regular updates and screenings can help institutions identify potentially suspicious behavior or transactions early, thus enhancing their overall compliance efforts and mitigating risks effectively.

The other options do not align with the standard practices of name screening within compliance frameworks. Name screening should not be limited to only when a suspicious transaction is detected or conducted at random times, as these approaches would lack the necessary thoroughness and regularity required by regulatory standards. Furthermore, conducting screenings only once a year would not be sufficient to manage ongoing risk effectively.