Sanctions screening is a fundamental control within a financial institution's compliance framework. Its primary function is to systematically check customer data against various official sanctions lists (e.g., OFAC's SDN List, UN Consolidated List, EU Consolidated List). This process is designed to identify individuals, entities, vessels, or locations that are subject to economic or trade restrictions. The goal is to find a "potential match" that requires further investigation to confirm its validity. This preventative measure ensures the institution does not onboard or transact with sanctioned parties, thereby complying with legal obligations and mitigating sanctions risk.

A. PEP screening is a distinct process to identify politically exposed persons for enhanced due diligence, separate from checking against sanctions lists.

B. A potential sanctions match requires investigation. Only a confirmed true match leads to required actions like blocking assets and reporting, not automatically a SAR.

D. While critical, screening cannot detect all possible sanctions risks, such as those hidden by complex ownership structures or indirect associations.

1. ACAMS Certified Know Your Customer Associate (CKYCA) Study Guide

Chapter 3: Core KYC Components. The guide distinguishes between screening for sanctions

Politically Exposed Persons (PEPs)

and adverse media

clarifying that the specific purpose of sanctions screening is to identify matches against government-issued sanctions lists.

2. Financial Action Task Force (FATF). (2023). International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation – The FATF Recommendations. Paris: FATF/OECD. See Recommendation 6 and its Interpretive Note

which mandate countries to implement targeted financial sanctions and require financial institutions to have policies and procedures to identify and freeze assets of designated persons without delay.

3. Zarate

J. C. (2013). Treasury's War: The Unleashing of a New Era of Financial Warfare. PublicAffairs. (Note: While a book

it is authored by a former senior Treasury official and is widely used in academic settings for financial crime courses). Chapter 2 discusses the mechanics and strategic purpose of using sanctions lists (specifically the OFAC SDN list) to identify and isolate illicit actors from the financial system.