On February 24, 2022, Russia launched an unprecedented invasion of Ukraine which quickly escalated into war. In the days following the invasion, the U.S., U.K, EU, and Australian governments began imposing a coordinated set of financial sanctions against Russia and Russian nationals to limit trade, penalize oligarchs, and cripple Russia’s economy.
The breadth of the sanctions implemented against Russia and Belarus, as well as the coordinated effort from all the global regulatory institutions including OFAC, the EU and Her Majesty’s Treasury, were unprecedented. Moreover, to compound the effects, it wasn’t all done in one fell swoop. Rather, there were sanctions programs released in batches — sometimes every few days, other times perhaps every week or two. And as soon as organizations would get a grip on one batch of sanctions, it would start all over again.
It’s safe to say we haven’t seen a sanctions environment change so drastically or as rapidly in a very long time, if ever.
Increased Sanction Volumes Added Fuel to the Fire for Overburdened AML Teams
“Prior to February 24, 2022, anti–money laundering (AML) teams within banks and financial institutions were already overburdened, overstressed, and under-motivated. Once the war began, these stressors were compounded tenfold. And, adding fuel to the fire, these overburdened teams now had to deal with pressures from Executive Teams and Boards as sanctions governance became a boardroom agenda item,” said WorkFusion’s VP of Strategic Accounts, Daniel Hazel.
How the sweeping Russian sanctions affected Financial Crime teams largely depended on what programs and systems were in place at the time of the invasion.
Banks that had not yet innovated their sanctions screening increased the pressure on their already overburdened, stressed, and dissatisfied analysts. This led to large-scale employee turnover, which meant that the staff that remained became even more overburdened, stressed, and dissatisfied. This vicious cycle created knock-on effects that became hard to ignore, including poor service to the bank’s end customer — delayed and frozen payments, unanswered queries, and needlessly blocked accounts that were in the queue to be reviewed by the overloaded sanctions teams.
Ultimately, it was a very poor experience for the three main stakeholders: employees, regulators, and customers.
On the contrary, if the bank already had focused on innovation and had an AI digital workforce in place, the effects were drastically different. The onslaught of sanctions alerts was largely adjudicated by the Digital Worker and the existing team got to act in a business-as-usual environment, to focus on those items that truly raised risk concerns to the financial institution. The team wasn’t overburdened, not hugely stressed, and generally was satisfied as the Digital Worker cleared the majority of false positives and allowed the existing team to perform proper risk assessments. Service to the customer remained high, even with all the external turmoil. This resulted in both improved customer satisfaction and employee experience.
“The long-lasting effect — and it continues to be played out daily — is that banks no longer want to be making changes after the fact. They want to be prepared and have built an organization that can handle any ‘black swan’ event. To do this, they need to have an organization that is location-agnostic, volume agnostic, and easily scalable across the enterprise. In short, they need a digital workforce,” added Hazel.
Managing Unprecedented Volume Spikes with AI Digital Workers
The unprecedented alert volumes resulting from the new sanctions put an immediate and ongoing strain on Financial Crime and Operations teams, and accelerated the need to solve for automation of redundant manual work, case management, and the capacity to handle volume spikes without adding a contingent workforce or overburdening full-time employees.
“A typical sanctions alert review analyst can work 200–300 alerts per day at high levels of quality. When the Russia sanctions hit, alert volumes spiked and analysts were working upwards of 500–800 alerts per day. Banks simply couldn’t hire fast enough and had no other levers to reduce and handle the alert volumes. At the time, examiners were handing out a lot of matters requiring attention (MRAs) citing bad alert quality and inadequate staffing in this area,” said Grant Vickers, WorkFusion’s Head of Financial Crimes Strategy.
For WorkFusion, the shift to our business on February 24 was dramatic. Two of our AI Digital Workers that focus on sanctions screening, Tara and Evelyn, became the front of the company for one reason only — our customers needed them. They, in essence, became aid workers.
Tara is an AI sanctions transaction screening analyst that reviews alerts in real-time to protect organizations from processing payments involving sanctioned organizations and individuals. And Evelyn is an AI sanctions and adverse media screening analyst with a primary mission to protect an organization from sanctioned or risky client relationships by reviewing alerts for screened organizations and associated individuals. Both Tara and Evelyn create immediate L1 review capacity, reduce risk of manual errors and missed SLAs, can be deployed in weeks instead of months, address the need for case management, and reduce customer impact. They allow your team to focus on true investigative work, not check-the-box work.
For example, WorkFusion’s Digital Worker Tara will review any payment messages and associated screening alerts and hits before auto-dispositioning them as either false positives or potential escalations. Tara will automatically conduct research to justify decision-making and draft human-readable justifications that are ultimately entered into a transaction screening solution like Firco Continuity to provide an audit trail. Analysts can review Tara’s work and all evidence on a single screen and confirm the final decision.
The Importance of AI Digital Workers for Sanctions Screening
There is no sign of easing sanctions unless Russia decides to stop the war. The significant sanctions actions for 2022 and the actions taken so far in 2023 foreshadow that sanctions will remain a continued instrument of foreign policy used to address threats to national security and foreign policy.
Earlier this month, the U.S. Treasury Department said it will increase its focus on cracking down on facilitators and third-country providers helping Russia evade Western sanctions. Additionally, on February 15, 2023 the EU announced that it has released its latest sanctions package.
Banks and financial institutions need to continue to invest in tools that can help them prepare for a “black swan” event. Tara and Evelyn are AI Digital Workers that allow organizations to immediately improve capacity, future-proof their sanctions alert review operations, reduce risk liability, and streamline alert escalations and hand-offs.