How it works

Screening runs at onboarding, whenever a sanctions list changes, and on payments in real time. Names and identifiers are compared against list entries using exact and fuzzy matching, and potential matches are reviewed by an analyst who confirms or discounts them. Confirmed matches lead to blocking or freezing, rejecting the transaction, and reporting to the relevant authority. Ownership also matters: entities owned by designated persons can be restricted even when they are not listed themselves.

Requirements by jurisdiction

• US: OFAC civil penalties generally apply on a strict liability basis. Under OFAC's 50 Percent Rule, entities owned 50% or more in aggregate by blocked persons are blocked. Since March 2025, records of transactions subject to OFAC regulations must be kept for 10 years (31 CFR 501.601). Blocked virtual currency must be reported within 10 business days.

• EU: Since 9 January 2025 the Instant Payments Regulation (EU) 2024/886 requires payment service providers offering instant credit transfers to check whether their users are subject to EU targeted financial sanctions at least daily and immediately after new designations.

• UK: OFSI does not need to prove knowledge or reasonable cause to suspect for breaches on or after 15 June 2022. Its ownership and control test uses "more than 50%", unlike the US and EU "50% or more"; OFSI consulted in February 2026 on aligning this. Relevant firms must report known or suspected designated persons to OFSI as soon as practicable.

Common challenges

Fuzzy matching on names generates large volumes of false positives, while weak matching misses true hits. OFAC's compliance framework cites screening failures such as outdated lists, missing identifiers like SWIFT BICs, and ignoring alternative spellings. Ownership chains and transliteration add further complexity.

How teams handle it in practice

Teams tune matching thresholds by list and risk, use secondary identifiers (date of birth, nationality, BIC, wallet address) to discount matches, and track list updates for same-day re-screening. Alert disposition is documented for audit. Compliance platforms like Corsa can pre-assess matches with supporting evidence so analysts focus on genuine hits.