The sanctions screening process is the procedure financial institutions use to compare customer and transaction data against sanctions lists issued by global regulators. These lists include individuals, companies, and jurisdictions subject to restrictions due to involvement in money laundering, terrorism financing, corruption, or other financial crimes.

The sanctions screening process ensures institutions avoid engaging in prohibited activity and demonstrates compliance with anti-money laundering (AML) frameworks.

Definition Of The Sanctions Screening Process

The sanctions screening process refers to the systematic and ongoing practice of checking names, accounts, and transactions against official sanctions databases. It applies both at the customer onboarding stage and during real-time transaction monitoring.

Facctum enables this through Payment Screening, supported by enriched sanctions data in Watchlist Management, and complemented by Customer Screening to ensure continuous compliance coverage.

Key Steps In The Sanctions Screening Process

The sanctions screening process involves several structured steps that ensure detection accuracy and regulatory compliance.

Key steps include:

• Data collection and validation of customer and transaction information.

• Name and entity matching against global sanctions lists (OFAC, EU, UN, HM Treasury, etc.).

• Fuzzy matching and transliteration to capture spelling variations and aliases.

• Real-time payment screening to block transactions before execution.

• Alert adjudication using Alert Adjudication for transparent case handling.

• Ongoing monitoring to ensure updates to sanctions lists are continuously applied.

Why The Sanctions Screening Process Is Important For Compliance

The sanctions screening process is a legal requirement under AML regulations. It prevents institutions from conducting business with sanctioned entities, thereby protecting markets and upholding global financial stability.

The FATF Recommendations stress that effective frameworks are essential to detect and disrupt illicit financial flows. Similarly, the FCA’s SYSC 3.2 rules require firms to establish proportionate systems and controls that are regularly reviewed for adequacy.

Challenges In The Sanctions Screening Process

While vital, the sanctions screening process comes with several challenges:

• High false positives due to common names or incomplete identifiers.

• False negatives caused by strict matching thresholds or poor data.

• Global coverage requiring consistent updates across multiple jurisdictions.

• Legacy system integration limiting efficiency and accuracy.

• Regulatory scrutiny demanding transparent governance and audit trails.

How Facctum Addresses Challenges In The Sanctions Screening Process

Facctum’s solutions are designed to overcome the limitations of sanctions screening and deliver stronger compliance outcomes.

Key ways Facctum supports the sanctions screening process include:

• Accurate data: Watchlist Management provides enriched and validated sanctions datasets.

• Advanced precision: Payment Screening applies fuzzy matching and AI-driven techniques to reduce false positives.

• Customer due diligence: Customer Screening ensures that sanctions checks extend to onboarding and lifecycle monitoring.

• Governance: Alert Adjudication delivers structured workflows and full auditability.

• Real-time scalability: Facctum supports high-volume, global payment screening.

The Future Of The Sanctions Screening Process

The sanctions screening process is evolving through artificial intelligence, machine learning, and explainable automation. These innovations increase detection accuracy and reduce operational costs.

Research such as Deep Entity Matching With Pre-Trained Language Models shows that transformer-based approaches can significantly improve match quality in complex datasets.

Applied to sanctions screening, these technologies strengthen the ability to detect subtle risks across global financial networks.

Strengthen Your Sanctions Screening Process Compliance Framework

The sanctions screening process is essential to global AML frameworks. By combining Watchlist Management, Customer Screening, Payment Screening, and Alert Adjudication, institutions can improve accuracy, reduce false positives, and ensure regulatory confidence.

Contact us today to strengthen your AML compliance framework