Watchlist management is a crucial component of financial crime compliance, involving the process of identifying, monitoring, and managing individuals or entities that are flagged as potential risks in relation to money laundering, terrorism financing, or other illicit activities. This typically includes maintaining and updating lists of sanctioned individuals, politically exposed persons (PEPs), and those with known ties to criminal organisations. 

Financial institutions use watchlist management systems to screen clients, transactions, and counterparties against these lists to ensure compliance with regulatory requirements. Effective watchlist management involves regular updates to reflect changes in sanctions or risk profiles, as well as automated tools that facilitate real-time screening and alerts for suspicious activities. By implementing robust watchlist management practices, organizations can mitigate risks associated with financial crime, enhance due diligence processes, and ensure adherence to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.