Sanctions screening is the process of checking a merchant or associated individuals (such as business owners or UBOs) against government-issued sanctions lists to ensure they are not prohibited from doing business. These lists are maintained by organizations such as the U.S. Office of Foreign Assets Control (OFAC), EU, UN, and UK HM Treasury, and include individuals, entities, and countries subject to trade or financial restrictions.

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Sanctions screening is a non-negotiable compliance requirement. Onboarding or transacting with a sanctioned party can lead to severe penalties, regulatory action, and reputational damage. Screening must occur:

• At onboarding (as part of KYC/KYB)
  
• On a continuous basis (to catch real-time matches as lists are updated)
  
• Across all beneficial owners, directors, and associated parties

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Most providers automate sanctions screening using real-time database integrations and fuzzy-matching algorithms to detect name variations or potential false positives. If a match is found, the account is typically escalated for manual review, and in many cases, onboarding is paused or declined.

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