Customer screening is the process of checking individuals or organisations against sanctions, politically exposed persons (PEPs), and other regulatory lists during onboarding and throughout the customer lifecycle. It is a central requirement of anti-money laundering (AML) and counter-terrorist financing (CTF) frameworks.

Regulators including the Financial Action Task Force (FATF) require financial institutions to implement Customer Due Diligence (CDD), including customer screening, before onboarding and throughout the relationship. Similarly, under the UK’s Money Laundering Regulations, firms must perform CDD, such as verifying identity with official documents, and apply sanctions screening as part of their compliance framework, as outlined by the FCA

Solutions like FacctView, Customer Screening help firms automate the process, reduce false positives, and strengthen compliance outcomes.

Definition Of Customer Screening

Customer Screening is the process of verifying customer identity data against watchlists, sanctions lists, and PEP databases to detect high-risk individuals or entities.

It is applied during:

• Onboarding: Screening new customers before accounts are opened.

• Ongoing Monitoring: Re-screening existing customers when lists are updated.

• Event-Based Triggers: Re-checking customers when significant changes occur, such as address updates or ownership changes.

The Role Of Customer Screening In AML

Customer screening ensures that institutions prevent prohibited individuals or organisations from entering or remaining in the financial system. It also supports wider AML processes by feeding into monitoring and alert adjudication.

Watchlist Management

Accurate screening depends on well-maintained lists. FacctList, Watchlist Management ensures sanctions and PEP data are harmonised and deduplicated so that screening is reliable.

How FacctView, Customer Screening Supports Compliance

FacctView, Customer Screening improves efficiency and accuracy by:

• Automating onboarding checks against sanctions and PEP lists.

• Integrating with FacctList, Watchlist Management for reliable list data.

• Reducing false positives through improved data quality and matching.

• Re-screening existing customers automatically when lists are updated.

This ensures firms can demonstrate compliance with international regulators and reduce operational strain on compliance teams.

Challenges Of Customer Screening

Customer screening is a regulatory necessity, but it creates challenges that firms must address carefully.

High Volumes

Large institutions may need to screen millions of customers, requiring efficient systems.

False Positives

Common names and transliteration issues can result in unnecessary alerts if lists are poorly managed.

Data Quality

Screening is only as accurate as the customer data and lists being used.

Regulatory Scrutiny

Supervisors expect firms to prove that their screening controls are effective and consistently applied.

Best Practices For Customer Screening

Best practices help firms achieve effective and efficient compliance:

• Integrate screening into onboarding workflows.

• Automate re-screening when lists are updated.

• Use strong governance controls to monitor system performance.

• Apply fuzzy matching to capture name variations while controlling false positives.

The Future Of Customer Screening

Customer screening is evolving as regulatory expectations and technology advance. Key trends include:

• AI-Enhanced Screening: Using machine learning to improve accuracy and reduce false positives.

• Integration With Digital Identity: Linking screening to national or biometric identity schemes.

• Continuous Screening Models: Moving from one-off checks to real-time monitoring.

• Cross-Border Alignment: Greater consistency in how regulators expect customer screening to be applied.

These are broader industry developments, not specific to Facctum’s current solutions.