Name screening is essential for businesses, governments, and global financial systems to avoid crimes such as money laundering, fraud, and terrorism financing. This is conducted by checking individuals/entities against global watchlists, sanctions, and Politically Exposed Person (PEP) lists. Name screening offers compliance measures to combat all sorts of threats and protect reputation.
In this article, our team explains the fundamentals of name screening, including which lists are used, when, and how the process must be implemented effectively. By the end, you'll have a comprehensive understanding of this important compliance tool.
What is Name Screening in AML Compliance?
Name screening is the process of reviewing the name of an individual or entity against global risk databases to detect risk factors. This process includes a close analysis of connections with sanctions, PEPs, criminals, or individuals associated with negative news. The aim here is to reduce the risk of doing business with entities that are involved in illicit activities. Key applications include:
- Screening new customers and determining their risk levels during the Know Your Customer (KYC) process.
- Checking customers periodically to ensure their profiles are compliant with regulations.
- Monitoring transactions to detect high-risk profiles.
What is the Purpose of Name Screening?
Name screening helps financial institutions avoid high-risk entities. This way, there will not be financial losses, regulatory breaches, or any reputational harm.
What Lists are Used in Name Screening?
- Sanctions lists include entities subject to both domestic and international restrictions. Some of the lists are OFAC (Office of Foreign Assets Control) Specially Designated Nationals (SDN) List, United Nations Security Council (UNSC) sanction lists, European Union (EU) sanctions, UK HMT Financial Sanctions List, and the DFAT sanctions list from Australia.
- PEP lists include individuals with significant public roles.
- Adverse media screening detects negative news that might damage a reputation.
- Watchlists are the records of agencies such as Interpol and the FBI.
- Internal lists are maintained by organizations to identify high-risk clients and prior issues.
When Should Name Screening Be Conducted?
It is essential that institutions regularly conduct name screening. Our team summarized key stages for you:
- Detect high-risk profiles when onboarding. Consider Know Your Customer (KYC) and Customer Due Diligence (CDD) requirements.
- Identify when risk profiles evolve. Remember, you must conduct annual client checks.
- Monitor client transactions in real-time. Focus on activities between the two countries. Make sure you detect sanctions violations and other illicit activity.
- Expose any deviation in behavioral patterns. Make sure you use professional monitoring tools to flag unusual activity.
How Does the Name Screening Process Work?
- Gather all details about customers, including full name, date of birth, nationality, and ID numbers on passports or driver’s licenses. Make sure you have clean input and that you do not miss any information or errors.
- Detect similarities in names, errors in spelling, and differences in phonetics.
- Check each profile against global watchlists, PEP databases, and adverse media news.
- Review flagged results to determine if the matches are positive (genuine) or false (non-threatening). Additional actions such as checking customer details may be necessary.
- Escalate and report. When there is a flagged match and it is confirmed as a true positive, then this case must be further escalated. File Suspicious Activity Reports (SARs) with the respective regulatory authorities and comply with anti-money laundering (AML) compliance requirements. Additional actions like restricting accounts can be considered.
- Monitor and flag unusual behavior continuously. This will help organizations stay alert to emerging risks.
What is Fuzzy Matching and Why is It Important?
Fuzzy matching techniques help detect risks when names appear with spelling differences, abbreviations, or formatting issues.
Key Algorithms:
- Levenshtein distance determines the number of edits, which is used for identifying misspellings or typographical errors.
- Jaro-Winkler detects similarities in strings, which is particularly effective when matching prefixes.
- Soundex matches names based on phonetics. For example: “Smith” and “Smyth.”
How to Reduce False Positives in Name Screening?
False positives are a major challenge in name screening. Up to 85% of alerts can be false positives (Dow Jones, 2023). To ensure efficiency and accuracy, organizations can follow these best practices:
- Use contextual data. Check details such as date of birth, nationality, and ID information.
- Determine fuzzy matching thresholds. Refine your matching sensitivity to balance accuracy and detection.
- Train review analysts. Equip compliance teams with all possible scenarios to improve the quality of their judgment.
- Apply machine learning. Use AI models to reduce manual workload and decrease the number of irrelevant matches.
What Are the Compliance Requirements for Name Screening?
Name screening is essential for full AML compliance and is required by key international regulations. Key requirements are as follows:
Financial Action Task Force (FATF) recommendations determine global standards for anti-money laundering (AML) and counter-terrorism financing (CTF). FATF recommendations include:
- Recommendation 10 requires Customer Due Diligence (CDD) to verify customer identity and assess risk factors.
- Recommendation 6 mandates compliance with targeted financial sanctions. The aim here is to prevent the financing of terrorism and the proliferation of weapons of mass destruction.
EU AML Directive 6 (AMLD6) requires EU companies to conduct sanctions and Politically Exposed Person (PEP) screening. Companies must apply strict rules for failing to detect high-risk entities.
FinCEN & OFAC regulations mandate U.S. companies comply with the Financial Crimes Enforcement Network (FinCEN) guidelines and Office of Foreign Assets Control (OFAC) requirements. Additionally, they must screen against Specially Designated Nationals (SDN), ensuring individuals/entities on OFAC’s sanctions list are identified and blocked.
Local guidelines must be checked, as each country has its own AML regulations. Singapore is regulated by the Monetary Authority of Singapore (MAS), the United Kingdom by the Financial Conduct Authority (FCA), and Germany by BaFin.
Which Industries Must Use Name Screening?
Regulatory bodies must use name screening to detect risks, strengthen compliance, and target all illicit factors. Here we have summarized the major industries for you:
- Banks and financial institutions
- Fintech and payment platforms
- Crypto exchanges and custodians
- Insurance and lending companies
- Real Estate, Law Firms, Accountants (DNFBPs)
What’s the Difference Between Name Screening and Transaction Screening?
| Feature | Name Screening | Transaction Screening |
| Scope | Individuals, entities | Transaction counterparties, geography |
| Timing | At onboarding & periodic | Real-time or batch |
| Purpose | Detect identity-based risks | Detect transactional red flags |
| Example | PEP detection | Sending funds to a sanctioned country |
Best Practices for Effective Name Screening in 2025
- Choose tools with fuzzy logic and AI. Select name screening solutions that can easily reduce false positives and catch variations in spelling and formatting.
- Keep watchlists continuously updated. If you keep these lists up-to-date, then you can consistently stay compliant and avoid oversight.
- Automate review workflows with analyst notes. Use tools that improve performance, reduce manual workload, and focus resources on genuine risks.
- Monitor and reduce false positives. High false positive rates drain resources and slow down processes.
- Localize screening parameters. Adapt settings to support regional languages, scripts, and character sets. This will improve the accuracy of your matches.
How Can Sanction Scanner Help?
Our team at Sanction Scanner ensures you have advanced name screening solutions. We help your business stay compliant with AML regulations with screening across more than 3.000 global sanctions, PEP lists, and watchlists.
Key Benefits:
- Fuzzy logic and AI-powered matching identify spelling mistakes and inconsistent data.
- Real-time alerts and monitoring systems continuously screen and automatically update details so that you can easily detect changes.
- Customizable workflows and API integrations must be adapted to your existing KYC and compliance systems.
- Comprehensive reporting and audit logs ensure traceability for internal use.
Whether you are in banking, fintech, crypto, insurance, or legal services, Sanction Scanner simplifies AML compliance and reduces all risk factors.
FAQ's Blog Post
AML Name Screening is the process of checking individuals or entities against global watchlists to identify potential involvement in money laundering or financial crime.
It helps organizations detect high-risk individuals, including sanctioned persons, PEPs, and criminals, ensuring compliance with international regulations.
It uses advanced algorithms and databases to match customer names against sanction lists, PEP lists, and adverse media sources.
Key sources include OFAC, UN, EU, HMT, and other global sanction lists, politically exposed persons (PEP) databases, and negative news archives.
Banks, fintechs, crypto platforms, payment providers, and other regulated entities must implement name screening to comply with AML laws.
Yes, modern AML tools provide real-time, automated name screening through APIs and web platforms to enhance speed and accuracy.
Common challenges include false positives, name variations, transliteration issues, and maintaining up-to-date watchlists across jurisdictions.
Ongoing name screening should be performed regularly or in real time, especially during onboarding and when regulatory lists are updated.
