Sanctions screening

Checking names against government prohibition lists.

Before opening an account or sending a payment, a business checks whether the person or company appears on a list of those it is legally barred from dealing with.

Matching customer and counterparty data against sanctions, embargo, and denied-party lists with fuzzy name logic. A counterparty is the other party in a transaction, and fuzzy name logic finds names that are similar but not identical, such as spelling variants and transliterations.

Sanctions screening typically works like this:

1. The business collects names and other details for customers and counterparties.
2. It compares them against sanctions lists using matching that tolerates spelling differences.
3. Possible matches become alerts.
4. An analyst reviews each alert, clears false matches, and escalates true ones.

The lists come from several authorities:

• The US Office of Foreign Assets Control (OFAC), which publishes lists including its Specially Designated Nationals list.
• The United Nations and the European Union, which publish their own sanctions lists.
• National authorities in other countries, such as the UK.

Matching is hard for several reasons:

• Name variants, since one name can be spelled many ways across languages and alphabets.
• Common names, which create many false alerts.
• Ownership, since OFAC treats an entity owned 50 percent or more by blocked persons as blocked too.

Sanctions screening sits next to terms that are easy to mix up:

• Watchlist is any list of parties to check against, and sanctions lists are one kind.
• OFAC is the US Treasury office that administers American sanctions programs.
• Politically exposed person (PEP) screening looks for people in public roles, which calls for deeper checks and does not bar them from banking.