Sanctions screening is often seen as a simple check: enter a name and see whether a hit appears. In practice it is a risk-based process that involves much more than consulting a single list.
What is sanctions screening?
Sanctions screening is checking customers, suppliers, UBOs, end users and sometimes entire transactions against relevant sanctions lists. These lists are drawn up by, among others, the European Union, the United Nations, the US OFAC and the United Kingdom. They contain individuals, organisations, vessels and sometimes entire sectors with which doing business is restricted or prohibited.
The aim is to prevent an organisation, knowingly or unknowingly, from making funds, goods or services available to a sanctioned party.
Why a name check is not enough
A simple name check has important limitations:
- Name variants and transliteration — names can be written in several ways, especially when translated from other alphabets.
- Underlying ownership — a party that is not on a list itself may still be sanctioned if a sanctioned person or organisation holds a certain ownership interest.
- False positives — common names regularly produce hits that, on closer assessment, turn out not to be genuine matches.
- Changing lists — sanctions lists are updated regularly, so a one-off check does not provide lasting certainty.
Careful assessment of each hit is therefore just as important as the screening itself.
What exactly is screened?
A full screening process looks beyond the direct contracting party:
- Customers and suppliers — the direct business partner in a transaction.
- UBOs — the ultimate beneficial owners behind a corporate structure.
- End users — the party that ultimately uses the product or service, even if it is not the direct customer.
- Countries and jurisdictions — certain countries or regions are subject to broader trade restrictions.
- Transactions — sometimes it is not the party but the nature of the transaction itself that warrants further investigation.
Risk factors that call for extra attention
Some situations call for a more thorough assessment than a standard check:
- Complex or opaque ownership structures
- Intermediaries or distributors without a clear role in the transaction
- Unusual payment routes or parties
- Destinations in countries with an elevated sanctions risk
- Products or services that may be sensitive in combination with the destination
Example from practice
A trading company screens a new supplier and gets no direct hit. On closer investigation of the corporate structure, one of the shareholders turns out to hold a majority interest in another company that is on a sanctions list. Without UBO research, this risk would not have come to light.
Frequently asked questions
Is a single sanctions screening enough?
No. Sanctions lists change regularly, so ongoing or periodic re-screening is needed to manage the risk structurally.
Which sanctions regimes matter most?
For most internationally trading companies, the EU, UN, OFAC and UK sanctions lists are the most relevant, depending on the countries they do business with.
What happens in the event of a hit?
A hit does not automatically mean a party is actually sanctioned. Every hit needs to be assessed: does it concern the same person or organisation, and is there a genuine risk?
TradeRisk carries out sanctions screening and risk assessments for customers, suppliers, UBOs and end users. Also read more about sanctions screening of companies and what a UBO is.