1. Data Collection

Collect customer details during Customer Due Diligence (CDD) or Know Your Customer (KYC) onboarding.

Key data fields include:

Full Name

Date of Birth

Nationality

Address

Identification Numbers (Passport, PAN, etc.)

Business/Organization details (for entities)

2. List Aggregation

Sanction screening uses updated lists from official authorities like:

OFAC (U.S. Office of Foreign Assets Control)

UN Sanctions List

EU Sanctions List

UK HMT Sanctions List

Local regulators (e.g., SEBI, RBI in India)

Third-party list providers (e.g., World-Check, Dow Jones, Refinitiv)

3. Screening Types

There are two main types of sanction screening:

a. Customer Screening (Name Screening)

Performed during onboarding and periodically (Ongoing Due Diligence).


Checks customer names against sanctions lists.

b. Transaction Screening

Real-time screening of transactions (e.g., SWIFT messages).

Verifies that sender/receiver names, intermediaries, and involved countries are not sanctioned.

4. Matching Logic

Uses logic and algorithms to match names (considering spelling variations, aliases, transliteration).

Uses phonetic and linguistic rules.

5. Alert Generation

If a match is found, the system raises an alert.

Alerts can be:

True Positive: Legitimate match

False Positive: Non-matching individual/entity that appears similar

6. Alert Review and Escalation

Compliance analysts investigate alerts using:

Customer KYC documents

Additional screening tools

Public databases (e.g., news, registries)

Actions taken:

Escalate to MLRO (Money Laundering Reporting Officer)

File STR/SAR (Suspicious Transaction Report)

Block/hold transactions

Report to regulators

7. Ongoing Monitoring

Periodic re-screening of customers as part of Ongoing Due Diligence (ODD).

Sanction lists are updated frequently – systems must stay up-to-date.

8. Record Keeping & Audit

Maintain logs of:

Screening results

Decisions taken

Alert resolution process

Regulatory filings

Tools Used

Dow Jones Watchlist

Refinitiv World-Check

Fircosoft

LexisNexis Bridger Insight

Accuity

SAS AML