Transaction Screening 101

Before diving into sanctions compliance specifically, we need to refresh ourselves on transaction screening and monitoring. 

Transaction screening is an activity within the overarching transaction monitoring process that deals with managing risk in customer transactions in an automated way. 

In a nutshell, it's when companies, such as banks, examine customer transactions. Physical and digital money flows in and out of accounts in dealings such as wire transfers, deposits, withdrawals, and cross-border payments. 

And the reality is this: Wherever money flows, so does nefarious criminal activity. 

That's why regulators, such as the Office of Foreign Assets Control (OFAC) in the US, and the UK's Office of Financial Sanctions Implementation (OFSI), create regulations that companies providing products and services must legally comply with.

Transaction monitoring helps companies:

  • Detect Suspicious Activity
  • Detect Money Laundering
  • Detect Terrorist Financing
  • Detect Fraud 
  • Detect Sanctioned Individuals & Entities

Transaction Screening and Sanctions Compliance

Transaction screening (which, as mentioned, is part of the wider monitoring process) screens customer data provided in transactions against global sanctions lists, criminal watchlists, and politically exposed persons (PEP) data in real-time. 

You can learn more about the process in this article

To illustrate how it works, we can use as an example. How so? Because clients meet sanctions compliance obligations by integrating our AI-powered API to perform transactional screenings as and when the transaction occurs (event-driven). 

The technology fits under the regulation technology (RegTech) umbrella and is astounding. 

But, as you will now discover, there are ways you can continuously enhance transaction screening to achieve optimal sanctions compliance - minimizing the risk for your business or organization.

Tip 1: Data Quality Is Paramount in Transaction Screening

We will get to the importance of data quality in a moment. But first, some necessary background. 

The sanctions landscape is volatile - reflecting the overall global political situation in the aftermath of the 2022 Russian invasion of Ukraine. But here is something to think about: All the international sanctioning bodies that create sanctions lists (you can refer to our article, What is a Sanctions List?), overall, do a fantastic job generating data that serves as a crucial tool for effective transaction screening. 

However, the following is an important point. The data is only as valuable as what it's checked against. What does this mean? It means companies must focus on capturing customers' data (and other business partners) that is high quality and designed to correct standards. 

To learn more about the importance of data quality and what steps to take, our article, Reducing False Positives in Sanctions Screening: Crucial Things to Know, will be helpful.

Tip 2:  Know Your Transaction Screening Needs Inside Out

The next tip for perfecting transaction screening in the fast-moving world of sanctions is knowing your company's transaction screening needs inside out.

The reality is this: Every organization has a unique set of sanctions compliance obligations - depending on the jurisdictions where business occurs. Other factors, such as the nature of the company and the kind of services offered, and the type of customers, also impact transaction screening requirements.

It sounds straightforward. But it takes time (and resources) to keep up with the evolving sanctions landscape and changing business dynamics. To effectively know your transaction screening needs inside out, consider the following steps:

  • Conduct a comprehensive risk assessment 
  • Regularly review and update your transaction screening processes
  • Customize your transaction screening criteria

This article delves further into the sanctions screening process.

Tip 3: Embrace Transaction Screening Professional Assistance

Sanctions compliance professionals are increasingly asking the following question: What is the impact of sanctions on transaction screening procedures?

The impact is multifold, including:

  • Increased Scrutiny
  • Expanded Watchlists
  • Enhanced Screening Criteria
  • Heightened Compliance Regulations

Sanctions officers have a tough job. The regulatory goalposts constantly move around, making hitting the target a challenge. And the task becomes even more complicated when sanctions compliance occurs in a real-time, 24/7 transactional digital environment.

And the reality is this: You need to be part of a large and well-resourced compliance team with in-house technical wizards to stay on top of sanctions compliance in transactional screening without external help.

So, if you don't have that, staying sanctions-compliant requires external professional help.

Two distinct areas of expertise help compliance teams mitigate the risk of violating sanctions regimes in transactional screening. The first are technical experts who embrace technology to solve compliance challenges. The second are professional services firms that provide consultancy.

Let's look at both:

Regulation Technology (RegTech)

An increasingly common type of help - from third-party service party providers - is offered by companies like RegTech solutions that utilize AI's growing power are proving to be a game-changer. 

Managing transaction screening in-house and relying on slow, manual processes is gradually becoming a thing of the past.

Today, easy-to-implement APIs that connect to all the significant global sanctions lists (updated every 60 minutes) make sanctions compliance in a volatile and changing political environment significantly more manageable. 

And in the not-too-distant future (the process has already begun),  AI will be at the center of sanctions compliance in transaction screening. 

Sanctions Risk Advisory Services

Consultancy firms can be excellent at offering brainpower to solve specific sanctions compliance needs. 

The scenarios are endless, but sanctions risk advisory services can help create risk assessments and transaction screening processes for situations such as:

  • A multinational e-commerce platform conducting business with a country under limited US sanctions
  • An investment bank engaging in secondary market debt transactions
  • fintech startup with thousands of daily cross-border payments

When procuring sanctions risk advisory services (many come under the wider anti-money laundering and counter-terrorist financing umbrellas), it's always crucial to seek local advice and use consultants who have experience in the industries your business operates. 

Final Thoughts and How Can Help

The complicated and fast-moving global sanctions landscape presents a formidable challenge for compliance officers.

It gets even more problematic when you consider that many regulatory bodies, such as OFAC, issue legally binding sanctions regulations with strict liability. What does this mean in plain English? It means if you break a sanctions law, then no excuses are accepted. And hefty financial penalties and devasting reputational damage may come your way.

Combining the above with the reality that a sanctions violation can occur within only one transaction (out of potentially thousands) and happen instantly demonstrates why transaction screening and sanctions compliance is a high-stakes endeavor. 

Continually improving and perfecting any transaction screening process for sanctions compliance should be a priority for all professionals in the field. 

To learn more about how our sanctions, PEP, and criminal watchlist screening service works and to receive answers to all your queries regarding the API, integrations, and more. Book a free Discovery Call now. 

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We offer a free 7-day trial (no credit card is required) and will be delighted to walk you through our service. is a highly reliable and cost-effective solution for sanction checking. AI-powered and with an enterprise-grade API with 99.99% uptime are reasons why customers globally trust us with their sanctions screening needs.