How an Inequalities List Enhances AML Compliance Processes

An Inequalities List is a tool used by banks and financial institutions to reduce false positives when screening customers against watchlists, sanctions lists, or other databases.

False positives happen when the system wrongly flags someone as suspicious because their name or details are similar to a person on a sanctions or criminal list.

An inequalities list keeps track of these known mismatches, cases where someone was flagged before, but after checking, was found not to be a match.

This helps the system ignore those same mismatches in the future, so the compliance team doesn’t waste time reviewing the same false alert over and over again.

Why It Matters in AML

• Saves time for compliance teams by reducing unnecessary reviews
• Improves accuracy in detecting real threats
• Keeps a record for audits and future reviews

Real-Life Example: Using an Inequalities List at a Global Bank

1. The Situation

A global bank screens its customers every day to make sure none are on international sanctions lists.

One customer named John A. Smith keeps getting flagged in the system because his name is very close to John Smith, who is on a UN sanctions list.

2. The Problem

Each time this happens, the compliance team must stop and manually check if John A. Smith is actually the same person as the sanctioned John Smith. After several checks, it’s clear he is not the same person.

3. The Solution

The bank adds “John A. Smith ≠ John Smith” to its Inequalities List. Now, the system remembers that this is a known mismatch and stops flagging him.

4. The Result

• The compliance team saves time.
• The system becomes more accurate.
• All actions are documented for future audits.