How Does Sanctions Screening Software Work?

Sanctions screening software checks customer data against entries in sanction, adverse media, and PEP (politically exposed person) lists using comparison algorithms.

Banks and insurers then use sanctions screening in banking during the onboarding process, but they are also obliged to review customers and business partners regularly throughout their business relationship. The need to identify and monitor new and existing customers on an ongoing basis is part of the KYC (Know Your Customer) process and helps underpin anti-money laundering regulations.

Sanctions screening tools can struggle with so-called false positives, namely alerts generated by the software to flag potential risks. Although technically accurate, they do not always indicate high-risk individuals. Since a compliance team member must investigate each false positive, banks and insurers increasingly use machine-learning techniques. Combining compliance staff’s expertise with data insights can help streamline sanctions screening and make it more effective.

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Four Key Questions for Compliance Officers to Answer for Sanction Screening in Banking

With what sanctions lists does my Sanctions Screening Software work?

The sanctions screening software matches data from individuals and legal entities with the existing customer base. There are public lists, such as the EU list, the Bundesanzeiger list (Germany’s Federal Gazette), the OFAC list (the US Office of Foreign Assets Control), or lists provided by data providers like Dow Jones, Lexis Nexis, info 4c, Refinitiv, or Reguvis. In addition, internal watchlists can also be used.

Which kinds of screenings should Sanctions Screening Tools conduct?

During onboarding, i.e. when an account is opened, the software screens on an ad-hoc basis and analyses data from new customers accordingly in line with the KYC principle. To monitor existing customers, the software conducts regular reconciliations and checks to ensure that customer data aligns with sanctions list data.

What happens when the sanctions screening software detects an anomaly?

If the software detects any customer data entries that match those on a PEP (politically exposed person), sanctions, or adverse media list during screening, it automatically generates an anomaly and assigns it to the responsible compliance manager for case processing, necessitating manual clarification.

What are the advantages of AI-driven sanction screening?

Machine learning is an AI component that aids in streamlining the sanctions list screening process. Closed cases are utilized to train machine learning models and generate a score value. This score indicates the probability of a noticeable anomaly posing a genuine risk. Any anomalies with a high probability are subsequently flagged as top priorities for the compliance teams to investigate.

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Discover Our Sanctions Screening Solution

ACTICO Customer Screening is an AI-powered software solution for banks and insurers. It automatically compares customer data against the sanction, PEP, and Adverse Media lists. One key advantage is fewer false positives, achieved by leveraging machine learning to automate case processing. Both on-premises and cloud operations are supported.

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What Are the Requirements Imposed on a Software for Sanction Screening in the Banking or Insurance industry?

For compliance teams, quality is the top priority and sanctions screening software must perform flawlessly. This point is particularly crucial.

High performance when screening sanctions lists involving data in bulk

Banks and insurers hold substantial amounts of data from their customers and other contractual partners, such as parties involved in claims or claimants. As part of their compliance obligations, they must routinely review the entire dataset, including updates, and the sanctions screening tools must be capable of managing this task.

Reducing the number of false positives for sanctions screening software

When the algorithm in the sanctions list screening software functions optimally, few false positives emerge, and it can be relied upon to find true positives. Incorporating machine learning into an AI-powered approach can further enhance the end result and reduce false positives by up to 60%.

Sanctions screening involving the use of multiple sanction lists

Banks and insurers often have to manage multiple sanction, adverse media, and PEP lists. Ideally, the sanctions screening software you use should include interfaces to facilitate the import of this data.

On-premise or cloud-operated software for sanction screening

More and more companies are opting to cloudify their compliance applications. But modern software used to check against sanctions list checks must be suitable for both on-premise and in-cloud operation.

Scope to update sanction screening software

The more standardised the software, the more rapidly security updates or new releases can be distributed.


Regularly Monitor the Client Base and Ensure Compliance

Automatically cross-check personal data against sanctions, PEP and adverse media lists, use machine learning and reduce false positives. Our experts are happy to answer any further questions you may have.

When it comes to sanctions list checking software, banks and insurance companies have differing requirements.

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Banks and Insurance Companies Have Different Requirements for Sanctions Screening Software

Major Banks, Retail and Universal Banks, Fintechs

Banks from this sector have thousands of customers and business relationships that need regular auditing, all of which the software has to handle regularly.

Private Banks, Mortgage Banks, Special Financiers

The focus for these banks is on more complex business relationships. Their clients often have complex networks. The software used must be flexible and agile enough to adapt the sanction screening rules to check against the listed clientele.

Insurance Companies

Insurers often hold data on millions of customers as well as data of contractual partners such as parties to claims or claimants. The sanction screening software must be capable of matching these high volumes of data with the sanction lists during batch operation.

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Sanctions Screening Software Ensures Transparency of the Customer Base

Day in, and day out, banks and insurers have to match their customer data with sanctions lists. This is how they meet the regulatory requirements, gain transparency about their customer base, and help safeguard their reputation.

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Success story
Sanctions Screening Software of a Major Insurer

High data volumes make it all the more important for the software to perform well and minimise the number of false positives identified. Read how one of the top-five insurers in Germany evaluates its new software.

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Machine Learning as a Component of Sanctions Screening Software

Financial institutions use software to regularly check new and existing customers for matches to sanctions and PEP lists. When it comes to reducing false positives, machine learning is in a class of its own.

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