How does sanctions screening work?

Sanctions screening is a process used by regulated firms to check whether a client, beneficial owner or transaction is linked to an individual, entity or ship subject to financial sanctions.

For UK accountants, legal professionals, TSCPs, property businesses and high-value dealers, it forms part of your wider AML, counter-terrorist and counter-proliferation financing controls. It sits alongside customer due diligence, risk assessment and ongoing monitoring.

At its core, sanctions screening is about one question: is this person or transaction connected to a person, entity or ship the UK has designated under financial sanctions?

If the answer is yes, the legal consequences can be serious. That’s why screening must be accurate, current and embedded into your day-to-day AML framework.

Where sanctions come from

In the UK, financial sanctions are primarily implemented under the Sanctions and Anti-Money Laundering Act 2018. They are administered by the Office of Financial Sanctions Implementation (OFSI), which sits within HM Treasury.

The UK maintains a Consolidated List of financial sanctions targets. This includes individuals, entities and ships subject to asset freezes, investment bans or other financial restrictions. Sanctions can also arise from UN measures implemented domestically. 

Comprehensive sanctions screening checks, like the AMLCC PEP and Sanctions Checks, look at the UK Consolidated List and any additional relevant international lists.

Sanctions risk also overlaps with proliferation financing risk. As highlighted in the UK’s National Risk Assessment (NRA), proliferation financing risk often intersects with sanctions regimes, particularly where a high-risk jurisdiction or export-controlled goods are involved.

What sanctions screening actually checks

Sanctions screening compares names and identifying details against official lists. It typically checks:

• clients at onboarding;
• beneficial ownership and Persons with Significant Control;
• directors and senior managing officials;
• counterparties in transactions;
• ongoing monitoring of existing clients.

The screening tool looks for matches based on name, date of birth, nationality and other identifiers.

If a match is found, this does not automatically mean the person is sanctioned. It creates an alert that must be reviewed. This distinction matters. Screening identifies potential matches. Your responsibility is to assess whether the alert is a true match for your client or a false positive.

Screening at onboarding

Sanctions screening should be built into your onboarding process. When you identify a client or beneficial owner, as required under Regulation 28 of the Money Laundering Regulations 2017, screening forms part of verifying who that person is and assessing risk.

In practice, this means:

• screening before entering into a business relationship;
• ensuring the data you screen is accurate and complete;
• recording the outcome of the screening check;
• escalating any potential matches immediately.

If a true match is identified, you must not proceed with the transaction or relationship and OFSI must be notified. This is not a risk-based decision. If you deal with a designated person’s funds, even unknowingly, you may commit an offence.

Ongoing monitoring

Sanctions screening is not a one-off event. Lists are updated frequently, sometimes with immediate effect following geopolitical developments. A client who was clear at onboarding could become designated later.

Ongoing monitoring means:

• checking lists for your client base;
• automated alerts where new names are added;
• re-screening when client details change;
• monitoring counterparties in live transactions.

Sanctions screening is mandatory. But how you implement it should reflect your risk profile. This aligns with a broaderrisk-based approach.

A firm with international clients, cross-border payments or exposure to high-risk jurisdictions may require tighter monitoring controls. 

Sanctions exposure also often overlaps with other risk factors such as:

• complex or layered ownership structures;
• politically exposed persons; or
• high-risk jurisdictions.

When multiple risk indicators align, scrutiny should increase proportionately.

What happens when you get a match

Some alerts generated by screening software are false positives. Names can be similar, spellings vary, dates of birth may differ. When an alert arises, you should:

• compare full identifying information;
• check nationality and address;
• review available open-source information;
• document your reasoning clearly.

If you conclude the match is false, record why. If you believe it is a true match, you must:

• stop the transaction immediately;
• freeze any funds or assets under your control;
• report to OFSI without delay.

Sanctions obligations and suspicious activity reporting are separate but can intersect. Depending on the circumstances, a SAR (Suspicious Activity Report) may also be required under the Proceeds of Crime Act 2002 (POCA), particularly if criminal property is suspected.

Sanctions and proliferation financing

Recent FATF emphasis on proliferation financing has expanded the context in which sanctions screening operates. Proliferation financing risk often involves:

• dual-use goods;
• export-controlled items;
• state-linked entities;
• complex supply chains;
• high-risk jurisdictions.

Screening helps identify links to designated individuals, entities or ships connected to these risks.

For regulated professionals involved in corporate structuring or international transactions, understanding this wider context is increasingly important.

Final thoughts

Sanctions screening works by systematically comparing your clients, beneficial owners and transactions against official sanctions lists, identifying potential matches and requiring immediate action where a true match exists.

It forms part of your wider AML and financial crime framework. It connects beneficial ownership, risk assessment, ongoing monitoring and escalation procedures into one coherent system.

When sanctions screening is integrated into a structured platform rather than handled manually or in isolation, it becomes consistent, documented and inspection-ready. 

AMLCC can feed sanctions and PEP checks directly into your client onboarding and ongoing monitoring process, with results recorded on the audit trail alongside your wider AML documentation. That way, screening is live, traceable and aligned with your overall risk-based approach at all times.