Sanctions Screening
Comparing customer, counterparty and transaction data against official sanctions lists to prevent business with designated persons, entities or jurisdictions.
Definition
Sanctions screening is the control that compares parties to a transaction or relationship - customers, counterparties, payment originators and beneficiaries, vessels, IBANs, wallet addresses - against official sanctions lists. A positive match must trigger a block, freeze and reporting workflow before the transaction is allowed to proceed.
The list landscape
- UN Consolidated List - universally binding.
- EU Consolidated Sanctions List - binding in all EU member states.
- OFAC SDN - US Treasury list; carries extraterritorial reach for USD-denominated activity.
- OFSI (UK), SECO (Switzerland), FINTRAC (Canada), regional regimes.
- Sectoral lists - SSI for Russia, NS-SDN for narcotics, etc., where activity is restricted rather than fully prohibited.
Common technical pitfalls
- Transliteration - Cyrillic, Arabic, CJK and Latin spellings of the same name must all match.
- 50%-rule aggregation - under OFAC, an entity 50%+ owned by an SDN is itself sanctioned, even without being named. Few systems compute this dynamically.
- Vessel and aircraft identifiers are routinely missed by name-only screening.
- Crypto addresses - OFAC publishes wallet addresses; on-chain screening is required for VASPs.
Regulatory anchor
EU Regulations 2580/2001, 881/2002 and the ever-expanding Russia regulations (833/2014, 269/2014); US Trading With the Enemy Act and IEEPA; UN Security Council resolutions transposed locally. Penalties for breach are typically strict liability and can reach a percentage of global turnover.