Most challenger banks admit to only ‘occasional’ sanctions screening
More than half of challenger banks have admitted to only performing occasional sanctions checks, according to a recent survey.
Only a quarter of the challenger banks it surveyed said they always perform the appropriate screening processes.
A total of 54 per cent of challenger banks admitted to performing checks regarding sanctions or politically exposed persons (PEPs) only “on occasion”, according to a survey by digital compliance company, SmartSearch.
Only a quarter of the challenger banks said they always performed the appropriate compliance checks.
The results come despite a wealth of new Russia-related sanctions being implemented following its invasion of Ukraine.
Only a third of challenger banks have made changes to their compliance procedures since many of these sanctions were put in place, the survey found.
More high street banks, however, have bolstered their compliance programmes since then, with 60 per cent adding additional checks.
The survey comes after a review last year by the Financial Conduct Authority found weaknesses in challenger banks customer due diligence processes, declaring that most did not obtain details about customers income and occupation.
Martin Cheek, MD at Smartsearch, said: “The figures reveal a larger problem with challenger banks and their unwise complacency towards compliance.
“These firms face the arduous task of keeping up with ever-changing compliance requirements, but simply screening new customers ‘on occasions’ is not enough.”
UK Finance, the country’s banking trade association, was contacted for comment.