Matching Names Isn't Enough for Financial Compliance

In June 2013, the Office of Foreign Assets Control, or OFAC, settled with Wells Fargo for up to 804 violations under the Foreign Narcotics Kingpin Designation Act. Better known as “The Kingpin Act,” these regulations are just one example of the new compliance pressure on financial institutions in recent decades.

The settlement for the “self-disclosed” penalties was a mere $23,937, but it served as a reminder of the difficulty financial institutions and businesses face when trying to comply with regulations. However, there is some good news: powerful new software such as entity matching tools make it easier for financial institutions to sift through their data and identify bad actors.

Entity Matching and Identity Resolution for Financial Compliance

Wells Fargo’s penalties involved accounts Wells Fargo opened for two individuals on the Specially Designated Nationals List under the Kingpin Sanctions.

Wells Fargo opened accounts with Claudia Aguirre prior to 2007 when she had been placed on the SDN List as Claudia Aguirre Sanchez. Wells Fargo also opened an account with one Carlos A. Ruelas between 2008 and 2010 despite the fact that Carlos Antonio Ruelas Topete was placed on the SDN List in 2005.

The two individuals managed to pass through Wells Fargo’s Customer Identification Program not necessarily because their name matching software malfunctioned, but because matching names alone is not sufficient for financial compliance.

Name matching software can match the name of a customer opening a new account against watch lists such as the SDN List even with misspellings, nicknames, or other name variants that may occur. In this case, the names on the accounts were somewhat different from the names on the SDN List and may have come under the bank’s matching threshold, but had the date of birth been part of the screening, there would have been a close match to the OFAC List.

So, what’s the best way to ensure regulatory compliance with organizations such as OFAC? For best screening results, it’s necessary to use entity matching tools instead of just name matching software. High-quality entity matching can compare and match records based on not just the name field but multiple fields like the date of birth, social security number, and address. This is necessary for identifying specific people applying to be customers who may be a Politically Exposed Person, or PEP, a money launderer, or a terrorist financier on some watch list.

To that end, NetOwl’s EntityMatcher software can provide financial firms, investment companies, and money transfer businesses with the advanced record matching capabilities required to ensure compliance with the various regulations including Know Your Customer, Political Exposed Person, Anti Money Laundering, terrorism financing, OFAC, and more.