Sanctions compliance is becoming increasingly complex, driven by rising geopolitical tensions, a surge in regulatory demands, and the growing number of sanctioned individuals and entities.
Financial institutions are under mounting pressure to replace outdated systems with more agile, intelligent screening solutions. But before any transformation can take place, compliance leaders must secure internal buy-in—starting with a strong business case for change.
Napier AI, an AI-powered AML platform, recently offered insights into how to build the business case for next generation sanctions screening.
A key element in winning over stakeholders is a thorough understanding of the total cost of ownership (TCO) for sanctions screening. This goes well beyond software licensing fees, encompassing everything from operational inefficiencies and risk exposure to technological limitations and commercial impact, it said.
The need for modernisation is particularly urgent. Sanctions lists are expanding at unprecedented speed, with a 30% year-on-year increase in sanctioned entities. In the EU, over 1,800 individuals and entities have been added to the sanctions list since 2022 in response to the war in Ukraine. In the US, the Office of Foreign Assets Control (OFAC) added over 3,135 designations in 2024—a significant leap from the 2,502 added in 2023, Napier AI explained.
Legacy systems that perform screening once or twice daily are no longer sufficient. Banks operating globally are facing unacceptable levels of risk unless they adopt near real-time screening tools that monitor customers continuously, beyond the onboarding process. The urgency is clear, but building the business case for investment means translating these threats into metrics that resonate with stakeholders across different departments.
Each team has its own priorities—and the TCO framework must reflect that. For operations, outdated technology creates inefficiencies like manual alert handling, time-consuming investigations, and large compliance teams. Modern screening tools can dramatically cut these costs by automating low-risk alerts and boosting productivity.
For risk teams, the stakes are higher than ever. Regulatory scrutiny has intensified, with substantial fines and reputational damage resulting from compliance failures. AI-powered screening solutions help mitigate these threats by reducing false negatives, allowing institutions to meet compliance mandates without spiralling costs.
Technology departments, meanwhile, are under pressure to accelerate digital transformation. Legacy compliance infrastructure not only drains budgets with high maintenance costs but also slows down innovation. Cloud-native, API-first solutions support scalable, low-maintenance screening tools that integrate easily with broader platforms.
From a business standpoint, modern compliance tools drive growth. They enable faster market entry, reduce friction in customer onboarding, and improve overall user experience. By linking TCO to commercial goals—such as increasing revenue or speeding up digital product launches—compliance leaders can secure broader executive support.
The message is clear: calculating TCO holistically is essential for justifying next-generation screening investments. As sanctions lists grow and the regulatory landscape evolves, institutions must act now to reduce risk, increase efficiency, and maintain competitiveness in an increasingly complex financial environment.
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