Process Management 3 mins read

Process mining helps banks comply with sanctions

The solution for 100% sanctions-compliance is process mining – ideally in combination with BPM. Learn how process mining helps banks comply with sanctions.

Steffen Lorenz Steffen Lorenz

Sanctions violations in banking have become a political hot potato due to the situation in Ukraine.
Global sanctions imposed against Russian banks and individuals complicate what is already a tricky problem for financial institutions. Many banks are currently enjoying record profitability, but this is not reflective of the previous decade. When it comes to profitability, according to McKinsey, half of banks generated returns that were below the cost of equity between 2011 to 2020.

The battle for higher revenues and lower costs can be made much more difficult by unexpected fines, such as for sanctions violations. For example, in 2015, Commerzbank, Germany, paid $1.45 billion for violating US sanctions against Iran and for not having adequate Anti Money Laundering procedures in place. BNP Paribas, France, paid even more – $8.9 billion in 2014.

Random checks not sufficient

Most banks have now set up appropriate processes to monitor compliance. However, checking these compliance processes is usually carried out on a random basis – by the internal audit department or by the external auditor. This does not provide 100% certainty. And sometimes the auditing happens months after the transaction was executed. This is too late to prevent transactions that are not compliant and potentially very expensive for the bank.

The new sanctions against Russia are not only a challenge but an opportunity to implement risk and compliance management in a new way to make it both efficient and effective.

A better way

What if your bank could make sure that 100% of transactions are processed exactly the way they must be? What if your bank could easily find out where the deviations between your as-is and your to-processes are? What if your bank could run additional analysis on process data, e.g., to find out if one employee is involved in multiple violations?

This means your bank would have complete process transparency for every business transaction – from end to end across all IT systems. All the relevant information about the execution of the transaction is available to prove whether the transaction is compliant and to analyze where further improvements are possible.

No violations. No fines.

The solution for 100% sanctions-compliance is process mining – ideally in combination with business process management. This approach allows for the definition and roll-out of to-be processes, process analysis and conformance analysis. If processes need to be changed, this approach makes sure that all relevant departments are involved and that every employee is informed about the changes.

Even better: A dedicated process rollout management supports making sure that every employee is informed about the relevant process changes and confirms that he/she will act accordingly (“read-and-understood”). If you want to find out more about how process mining can be used for compliance management, download this new white paper below.