AML Screening & Name Screening Software

What is Name Screening in AML Compliance?

We call the act of looking up a person’s name in financial databases name screening. These databases could be based on sanctions lists, lists of PEPs, criminal wanted lists or news. This process proves very helpful during KYC processes, customer risk reviews and transaction monitoring alerts. 

What is the Purpose of AML Name Screening?

The main goal of name screening is to identify the individuals who may pose serious risk to businesses. We call these individuals “high-risk entities”. These entities have higher chances of getting involved in financial crimes. Thus, with this process, you can further ensure the security of your business. It is also mandatory due to the AML regulations worldwide. Also, not applying proper name screening can put you in serious danger of regulatory penalties and reputational harm. 

We have found an example in order to show you the severity of these penalties. According to The Guardian, The FCA fined Starling Bank £28,959,426 last year, which was due to the gaps in their screening controls. The other example comes from Reuters. FINRA (The U.S. Financial Industry Regulatory Authority) has been investigating the screening processes of Morgan Stanley, who received a fine of $10 million back in 2018.  

What Lists are Used in AML Screening?

You can compile the lists from several sources. The first sources we are going to mention are sanctions lists. There are several, OFAC of The U.S., UN Sanctions Lists, EU Consolidated List to name a few. You can check individuals, entities and countries subject to restrictions thanks to these lists.

The next sources we are going to mention are PEP Lists. PEP stands for politically exposed persons, and it designates the people who hold prominent public functions, as well as their relatives and close associates. Being in these lists does not particularly mean that there is a misconduct but they still help businesses to mitigate corruption and bribery risks. Also, using adverse media and negative news as sources can go a long way in securing your business against financial threats. With these databases, you can flag individuals who are linked to fraud, money laundering, terrorism and other crimes. 

Last but not least, you may benefit from paying attention to watchlists & law enforcement lists such as those from FBI and Interpol.

a

When Should Name Screening Be Conducted?

First, you must conduct the screening during the onboarding phase, in order to be sure that the customer does not pose any risks. However, the work does not end there. In addition to periodic reviews, whose frequency depends on the customer, you must monitor each transaction in real time. 

How Does the Name Screening Process Work?

The first step of the name screening process consists of collecting and verifying customer identity data through personal information. Then, check whether the customer’s name matches any watchlists with the help of fuzzy logic & AI. Next, compare the data with global databases. After this step, let the analysts review false and true positives. If you identify a true match, then swiftly report Suspicious Activity Report (SAR) to the relevant authority. As we have mentioned in the previous paragraph, do not forget to apply ongoing monitoring as well. Let’s give an example of why ongoing monitoring is so important. During onboarding, an entity may appear free of risk. However, this may change due to reasons like their future actions or updated lists. 

What is Fuzzy Matching and Why is It Important?

We use Fuzzy Matching in order to identify similar but not identical data. It may use specific algorithms, machine learning or AI. Fuzzy Matching may depend on some particular techniques such as Levenshtein Distance, Jaro-Winkler or Soundex. Its uses, for example, include spelling variations, typos, missing letters, different transliterations, reversed names and nicknames. Let’s continue with its importance. As you may have noticed in the examples we have given in the previous paragraph, there can be numerous variations regarding names. Since Fuzzy Matching can identify and point these out, you can avoid missed true positives, reduce compliance risk and improve efficiency.  

How to Reduce False Positives in AML Screening?

There are several steps you can take to reduce errors in Name Screening. The first one is to use contextual data, because some individuals may have similar names. You can differentiate these easily by adding date of birth, nationality, address or ID numbers. You can also choose to minimize false alarms by adjusting fuzzy matching and scoring thresholds. Also, do not forget to take advantage of continuous advances in AI and Machine Learning, since they can analyze patterns to prioritize alerts and reduce unnecessary manual reviews. Since we have already mentioned the manual reviews, let’s end this section by touching upon those who perform these reviews. You must not let your compliance staff get behind in the continuously changing AML landscape. This way, you can ensure that they can efficiently review alerts and identify true positives. 

What Are the Compliance Requirements for Name Screening?

As you may expect, compliance requirements highly vary according to relevant authorities. However, we can regard FATF as the global regulator, since it encompasses tens of countries. For example, FATF Recommendation 6 requires countries to implement the targeted financial sanctions regimes to comply with the UNSCRs and Recommendation 10 necessitates institutions to take adequate steps to identify and verify the customers and beneficial owners.

Let’s give examples from relatively domestic institutions as well. For example the U.S.’ FinCEN & OFAC, requires financial institutions to conduct SDN (Specially Designated Nationals) and sanctions list checks. On the other hand, EU AML Directive 6, which enforces screening for PEPs, sanctions and high-risk individuals across EU. Even though most of the regulations are similar, you should always check the requirements before taking any action. 

Which Industries Must Use Name Screening?

The first industries we’re going to mention are banks & fintech. These institutions often handle high volumes of transaction and have stricter regulatory obligations, so it is essential for them to apply a proper screening process. Crypto Exchanges, VASPs, insurance and lending businesses, and DNFBPs (Designated Non-Financial Businesses and Professions) such as real estate agents, lawyers, notaries, accountants, dealers in precious metal/stones and trust/company service providers are also among the other industries that must apply Name Screening.

What’s the Difference Between Name Screening and Transaction Screening?

The differences between the two may seem obvious. However, detailing their distinctions can help you better understand the scope of Name Screening. We conduct Name Screening on people and entities, while transaction screening is done on parties and locations of the transaction. Another major difference comes from their respective timings. Name Screening is done during onboarding and periodically. On the other hand, you must conduct Transaction Screening continuously during transactions. Their focuses also differ a lot. When we do Name Screening, our aim is identity risk detection but in Transaction Screening, our focus shifts to detecting illicit fund movements.  

Best Practices for Effective Name Screening in 2025

The most helpful step you can take here is choosing AI-powered tools with fuzzy logic, which we offer here at Sanction Scanner. Our AI-based solutions can help you catch name variations, typos, transliterations, aliases and more. Another important thing to do regularly is keeping the lists up-to-date, so that they reflect the latest regulatory requirements. Moreover, an automated workflow can allow you to streamline the screening process as well as reducing manual effort and errors. Lastly, it goes without saying that you must try to minimize false positives by incorporating contextual data, setting proper matching thresholds and balancing the roles of AI and analysts. 

How Can Sanction Scanner Help?

First of all, Sanction Scanner allows you to do screening against more than 3,000 global lists. This way, you can check customers, counterparts and transactions against regularly updated global lists. We have already mentioned the uses and the importance of Fuzzy Matching several times in this post. Luckily, Sanction Scanner’s Fuzzy Matching and Phonetic Checks can detect name variations, typos, transliterations and aliases, so that you can reduce the amount of missing true matches. 

Even though it was not among the things that we have mentioned in this post, API integration plays a crucial role in AML technologies. Our custom API can easily integrate with existing systems for automated screening and real-time alerts.