Event-Based Microservices Architectures for High-Throughput Sanctions Compliance

Abstract

As financial institutions engage in more and more cross-border transactions, as well as changing regulatory requirements and constantly growing global watchlists, the volume and complexity of the demand for sanctions screening is growing to unprecedented levels. Traditional monolithic compliance solutions may not offer the scalability, resilience, low-latency and operational flexibility needed to effectively support real time sanctions screening, leading to processing bottlenecks, delayed decision making and higher operational costs. The study introduces a new microservices-based architecture that allows for high throughput for sanctions compliance based on principles of asynchronous event streaming, decoupled services and using cloud-native deployments. In the proposed architecture the data ingestion service, event publishing service, sanctions screening service, watchlist management service, alert generation service, audit logging service, notification service and reporting service are all first class pieces of microservices that can be deployed independently, meaning they can be detached from any concerns when trouble arises.The proposed architecture breaks down the compliance workflow into independently deployable microservices each responsible for their own set of actions, such as data ingestion service, event publishing service, sanctions screening service, watchlist management service, alert generation service, audit logging service, notification service, and reporting service, and an event broker is used for reliable, scalable and fault-tolerant communications between these services. The research methodology involves architectural design, technology integration and performance evaluation on representative high volume sanction-screening data sets with the aim of measuring throughput, response latency, scalability, fault tolerance and resource usage across different transaction rates. Experimental results show that the proposed architecture achieves significantly higher processing throughput, lower end-to-end response time, and horizontal scalability, and high continuous services availability when there is a component failure compared to the traditional monolithic implementations. Moreover, the architecture enhances regulatory requirements by offering robust audit logs, secure event processing, as well as durable and distributed execution. This work makes several key contributions, including the creation of a scalable event-driven model for financial compliance, by embedding cloud-native microservices into the distributed event streaming infrastructure of financial sanctions screening in real-time; and a detailed performance assessment to show that the proposed architecture was viable, enabling the implementation of future enterprise financial compliance engines handling large volumes of financial transactions in a regulatory environment.