Real-time payment screening is the process of checking transactions against sanctions, politically exposed persons (PEP), and regulatory lists instantly, before the payment is processed. With the rise of instant and cross-border payment systems, regulators expect firms to detect prohibited transactions without introducing delays.
Unlike traditional batch screening, which processes transactions after settlement, real-time screening ensures that sanctions or high-risk parties are identified immediately. This prevents institutions from breaching financial crime regulations while maintaining the speed customers expect in digital payments.
Global regulators such as the Financial Action Task Force (FATF) have reinforced that payment messages, especially for cross-border transfers, must include comprehensive screening data (per updates to Recommendation 16) to support sanctions controls. In Europe, the Instant Payments Regulation (IPR) mandates that Payment Service Providers perform sanctions (restricted-party) screening even for instant credit transfers
Definition Of Real-Time Payment Screening
Real-Time Payment Screening refers to the immediate filtering of payment transactions against sanctions and watchlists before they are executed.
Its objectives are to:
Block payments to sanctioned individuals or entities.
Detect suspicious behaviour linked to money laundering or terrorism financing.
Maintain compliance with AML/CTF obligations without delaying customer transactions.
Reduce the risk of regulatory fines and reputational harm.
The Role Of Real-Time Screening In Compliance
As instant payment systems become the global standard, the need for real-time compliance controls has intensified.
Instant Payment Systems
Schemes such as SEPA Instant in Europe and FedNow in the United States demand compliance checks within seconds.
Cross-Border Payments
Cross-border transfers often involve multiple jurisdictions, increasing the complexity of sanctions compliance.
Regulatory Obligations
Regulators expect that sanctions checks are not bypassed in fast-payment environments. This means firms must combine speed with precision to remain compliant.
Key Components Of Effective Real-Time Payment Screening
To meet compliance expectations, real-time payment screening requires strong data, technology, and governance.
High-Quality Data
Payment messages must be complete and properly structured, especially as ISO 20022 becomes the global standard.
Accurate Lists
Sanctions and PEP lists must be updated in real time. FacctList, Watchlist Management ensures harmonised and accurate lists for screening.
Automated Screening Engines
Solutions such as FacctShield, Payment Screening provide instant matching logic to block prohibited payments without adding latency.
Challenges Of Real-Time Payment Screening
Introducing real-time controls comes with operational and technical hurdles.
Latency
Screening must occur in milliseconds to avoid slowing down instant payments.
False Positives
Overly sensitive screening can block legitimate payments and frustrate customers.
System Integration
Institutions must integrate screening engines into payment rails without disrupting existing processes.
Global Alignment
Different sanctions regimes create challenges for cross-border real-time compliance.
Best Practices For Real-Time Payment Screening
Firms can improve their real-time payment screening outcomes by following best practices:
Implement instant sanctions screening across all payment channels.
Optimise fuzzy matching thresholds to balance detection with low false positives.
Regularly update sanctions and PEP lists in real time.
Test systems against regulator expectations and conduct ongoing governance reviews.
Integrate screening seamlessly with ISO 20022 payment standards.
The Future Of Real-Time Payment Screening
As instant payments and cross-border systems expand, payment screening will continue to evolve. Emerging trends include:
AI-Powered Speed Optimisation: Using machine learning to reduce false positives without adding delays.
Global Standardisation: Greater alignment of instant payment compliance rules across jurisdictions.
Continuous Sanctions Updates: Streaming sanctions data directly into screening engines.
Integration With Fraud Prevention: Blending AML and fraud checks into a single real-time process.
These are broader industry trends, not specific to Facctum’s current solutions.
Strengthen Your Compliance With Real-Time Payment Screening
With the rise of instant payments, firms must balance speed and compliance by embedding sanctions screening directly into payment flows. Institutions need solutions that deliver both accuracy and efficiency in milliseconds.
Our solution, FacctShield, Payment Screening, helps firms implement real-time transaction controls, reduce false positives, and remain aligned with global AML standards.
