How Often Should Non-financial Institutions Screen Their Customers Against Sanctions Lists?

non-financial institutions should screen customers at the point of onboarding and on an ongoing basis. The FATF recommends screening when establishing a new business relationship, when sanctions lists are updated (typically daily), and periodically as part of your ongoing monitoring programme. The frequency of rescreening should be proportionate to the risk level of the customer and the nature of the business relationship.

What is the Difference Between Sanctions Screening and KYC?

Sanctions screening checks customer names against government-maintained sanctions and watchlists (such as OFAC SDN, EU, UN and UK Sanctions List) to identify designated individuals and entities. KYC (Know Your Customer) is a broader process that includes identity verification, beneficial ownership identification, and risk assessment. Sanctions screening is one component of KYC, but not the entirety of it.

Are Small Businesses Required to Perform AML Screening?

Yes, if they operate in a regulated sector. Under FATF recommendations and national legislation (such as the UK Money Laundering Regulations 2017), non-financial institutions of all sizes are required to conduct customer due diligence, which includes sanctions screening. The risk-based approach allows proportionate controls, but the obligation itself applies regardless of firm size.

What Happens If a Sanctions Screening Returns a Potential Match?

A potential match (or alert) requires investigation. The compliance officer should review the match details, assess the confidence score, compare identifying information (date of birth, nationality, address), and determine whether the match is a true positive or false positive. True positives must be reported to the relevant authority and the business relationship must not proceed.

How Does Fuzzy Name Matching Reduce False Positives?

Fuzzy matching algorithms use multiple techniques including string similarity scoring, phonetic matching, and configurable weighting. By combining name similarity with additional data points such as date of birth, nationality, and country, the system can more accurately distinguish true matches from coincidental name similarities, significantly reducing the volume of false positives that compliance teams need to review.

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AML compliance insights and guides

Expert articles on sanctions screening, FATF recommendations, and regulatory best practices for non-financial institutions.

15 Mar 2025ComplianceUnderstanding non-financial institution AML obligations in 2025Designated Non-Financial Businesses and Professions face expanding AML obligations under the EU's 6th Anti-Money Laundering Directive and updated FATF recommendations. This guide breaks down what non-financial institutions need to know.12 min read
28 Feb 2025TechnologyFuzzy name matching: how it works and why it mattersHow advanced algorithmic matching techniques detect sanctions matches across transliterations, aliases, and spelling variations while minimising false positives.10 min read
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5 Mar 2025RegulatoryAMLA: what the EU's new AML authority means for non-financial institutionsThe EU Anti-Money Laundering Authority (AMLA) is reshaping compliance supervision across Europe. Learn how direct supervisory powers, the single rulebook, and cross-border coordination affect DNFBPs.10 min read
20 Feb 2025RegulatoryCross-border compliance: navigating multi-jurisdictional sanctions regimesOperating across borders means complying with multiple sanctions regimes simultaneously. This guide covers jurisdictional triggers, extraterritorial reach, and practical strategies for multi-list screening.12 min read

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Common questions about AML compliance and sanctions screening for regulated businesses.

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non-financial institutions should screen customers at the point of onboarding and on an ongoing basis. The FATF recommends screening when establishing a new business relationship, when sanctions lists are updated (typically daily), and periodically as part of your ongoing monitoring programme. The frequency of rescreening should be proportionate to the risk level of the customer and the nature of the business relationship.
Sanctions screening checks customer names against government-maintained sanctions and watchlists (such as OFAC SDN, EU, UN and UK Sanctions List) to identify designated individuals and entities. KYC (Know Your Customer) is a broader process that includes identity verification, beneficial ownership identification, and risk assessment. Sanctions screening is one component of KYC, but not the entirety of it.
Yes, if they operate in a regulated sector. Under FATF recommendations and national legislation (such as the UK Money Laundering Regulations 2017), non-financial institutions of all sizes are required to conduct customer due diligence, which includes sanctions screening. The risk-based approach allows proportionate controls, but the obligation itself applies regardless of firm size.
A potential match (or alert) requires investigation. The compliance officer should review the match details, assess the confidence score, compare identifying information (date of birth, nationality, address), and determine whether the match is a true positive or false positive. True positives must be reported to the relevant authority and the business relationship must not proceed.
Fuzzy matching algorithms use multiple techniques including string similarity scoring, phonetic matching, and configurable weighting. By combining name similarity with additional data points such as date of birth, nationality, and country, the system can more accurately distinguish true matches from coincidental name similarities, significantly reducing the volume of false positives that compliance teams need to review.