Sanctions screening
Sanctions screening is the check that banks, EMIs and other firms run to make sure they don't deal with, or make funds available to, people and organisations under financial sanctions. They compare the names of clients, beneficial owners and payment counterparties with official sanctions lists, such as the EU's consolidated financial sanctions list, at onboarding, whenever the lists change and before payments go out.
What sanctions require
EU sanctions, formally called restrictive measures, are adopted by the Council of the EU and apply directly in every member state. Financial sanctions usually mean two things: freezing the funds and economic resources of listed people and entities, and a ban on making funds available to them, directly or indirectly. Sectoral sanctions go further and restrict whole types of activity, such as certain transactions with named sectors of a country's economy.The ban also reaches entities that a listed person owns or controls. Under EU guidance, ownership of more than 50% is the usual test, but control without majority ownership counts too. That's why screening runs on beneficial owners, not just the client's name.
Which lists are screened
| List | Issued by | Why it matters to an EU account |
|---|---|---|
| EU consolidated financial sanctions list | European Commission, from Council decisions | Legally binding for every EU firm |
| UN Security Council sanctions lists | United Nations | Implemented in EU law |
| UK Sanctions List | Foreign, Commonwealth and Development Office; financial sanctions enforced by OFSI (HM Treasury) | Applies to payments in GBP or through UK institutions |
| SDN and other lists | OFAC (US Treasury) | Applies to US dollar payments and US correspondent banks |
The main sanctions lists in more detail
- EU: the Council adopts restrictive measures, and the Commission publishes the consolidated list of persons, groups and entities subject to EU financial sanctions. They cover terrorism, human rights violations, cyber attacks and country regimes such as Russia, Belarus and Iran.
- United Nations Security Council: its consolidated list covers sanctions regimes adopted by the Security Council, which EU and UK law implement.
- UK: since 28 January 2026 the UK Sanctions List, published by the Foreign, Commonwealth and Development Office, is the only source of UK designations. OFSI's former consolidated list was withdrawn.
- US: the Office of Foreign Assets Control (OFAC) publishes the Specially Designated Nationals (SDN) list. Under OFAC's 50 percent rule, entities owned 50% or more by blocked persons are blocked too, even if they aren't named.
How screening works
- At onboarding, the client, its directors and its beneficial owners are checked.
- The whole client base is rescreened whenever lists are updated, which can happen several times a week.
- Outgoing and incoming payments are screened for the payer, payee, institutions and payment details, especially on SWIFT payments.
- Possible matches go to an analyst, who compares dates of birth, addresses, registration numbers and other identifiers.
- A confirmed match means the funds are frozen and reported to the national competent authority.
Customer screening vs transaction screening
- Customer screening: checks clients, directors and beneficial owners at onboarding and every time a sanctions list changes. It catches a client who becomes sanctioned during the business relationship.
- Transaction screening: checks each payment's parties, banks, countries and free-text fields before it's processed. It catches sanctioned counterparties that aren't the provider's own clients.
How to reduce false positives
A screening process that flags too much slows payments down and buries real matches. Providers reduce false positives by:- matching on secondary identifiers, such as date of birth, nationality and registration number, not just names
- tuning fuzzy matching thresholds for each list and data field
- cleaning customer data, so names, addresses and ownership details are complete and consistent
- recording reviewed and dismissed matches, so the same false positive isn't raised every day
What to look for in sanctions screening software
- List coverage and update speed: all the lists the firm must apply, refreshed within hours of a new designation
- Matching that handles aliases, transliterations and spelling variants
- Real-time screening through an API, so payments aren't delayed
- Case management and an audit trail that shows who reviewed each alert and why it was cleared
- Ownership data, to apply the 50% ownership and control rules
Sanctions screening and SEPA Instant
The EU Instant Payments Regulation changed the model for euro payments. Since 9 January 2025, payment providers that offer instant euro transfers must check their own clients against EU targeted financial sanctions at least once every calendar day, and straight after any new listing.In return, they don't screen each SEPA Instant transfer one by one against EU lists, which keeps instant payments within the ten-second limit.Screening vs monitoring
Sanctions screening asks whether a party is on a list. Transaction monitoring asks whether a pattern of activity looks suspicious. PEP screening and adverse media screening add risk information but don't on their own block a payment.What happens if sanctions are breached
Breaching EU sanctions is a criminal offence in member states. Directive (EU) 2024/1226 harmonises the criminal offences and penalties for violating EU restrictive measures, including making funds available to a listed person and failing to freeze their assets, and member states had to transpose it by May 2025. Firms can face fines, and individuals can face prison.That's why sanctions compliance isn't left to the client's risk rating: a provider must screen every client and payment, whatever its risk.FAQ
Usually because a name in the payment, or a word in the reference, resembled an entry on a sanctions list. The provider clears it once it confirms there's no match, sometimes after asking you for details.
The obligation isn't. A firm must not breach sanctions, whatever the client's risk rating. How it designs its screening, such as matching thresholds, is up to the firm.
They stay frozen until the person is delisted or the competent authority grants a licence to release them.
Sanctions screening checks whether a party is legally banned from receiving funds. PEP screening checks whether someone holds a prominent public function, which calls for enhanced due diligence but not a ban.
US sanctions don't bind EU firms directly, but most payment providers screen OFAC lists because US dollar payments and US correspondent banks require it.
Related terms and sources
Transaction monitoring · High-risk third country · Politically exposed person · Adverse media screening · Correspondent bank · Verification of Payee · Browse the full glossary
Last reviewed October 30, 2026Disclaimer
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
What We Offer
IBAN Accounts For Your Business
Support & Compliance
Narvi Knowledge Center
Alternative Investment Funds [whitepaper]Family Offices [whitepaper]Shipping Industry [whitepaper]How to Open a Business Account in FinlandNarvi vs. Wise, Revolut, N26, and other alternativesNarvi vs. Stable.comNarvi vs. payabl.Narvi vs. ConnectPayNarvi vs. IBAN4UNarvi vs. GenomeNarvi vs. PaxumNarvi vs. BilderlingsNarvi vs. NetellerNarvi vs. KontistPayments BlogPayments Glossary
Narvi Payments Oy Ab is an Authorized Electronic Money Institution (EMI). Narvi’s EMI license is granted by the Finnish Financial Supervisory Authority (FIN FSA) with the registration number 3190214-6. Narvi’s license is passportised to all European Union countries.
Built and regulated in Finland© 2026 Narvi. All Rights Reserved.
v1.332.0