Sanctions screening is a critical safeguard against financial, reputational, and regulatory risks. Regulators are raising expectations, penalties are increasing, and financial crime tactics are evolving faster than legacy systems can cope. For compliance leaders, the stakes are clear: technology and strong governance are the only scalable paths forward. In this article, we explore the key challenges, best practices, and the role of strong KPIs in sanctions screening.
why sanctions screening needs urgent attention
Global sanctions regimes are expanding rapidly, with frequent updates across hundreds of programs. Legacy systems are strained by soaring transaction volumes, leading to missed matches, false positives, and compliance bottlenecks. Poor data quality, fragmented list management, and manual reviews compound these risks.
To cope with intensifying enforcement, firms must modernise screening through AI-driven tools, integrated workflows, and robust governance. Real-time monitoring and periodic testing are the foundation of effective sanctions compliance.
This urgency sets the stage for the next challenge: understanding the common red flags that can overwhelm compliance teams.
what are some sanctions screening challenges?
Sanctions screening is rarely straightforward. Several hurdles make it both resource-intensive and high-risk:
- Name variations and aliases: Spelling differences, transliteration, and multiple identities drive false positives
- Complex ownership structures: Layered entities obscure beneficial owners
- High-risk jurisdictions: Links to sanctioned regions or tax havens demand close scrutiny
- Newly formed companies: Limited operating history complicates verification
- Operational hurdles: Fragmented list formats, frequent rule changes, and false positives strain teams
False positives remain one of the biggest pain points. They slow down investigations, drain resources, and frustrate customers. These challenges highlight why adopting best practices is essential to building a sanctions screening process that is not only compliant but also efficient. Smarter strategies can help reduce their impact:
- Maintain whitelists to suppress recurring false alerts
- Standardise and normalise customer data for consistent matching
- Use automated contextual summaries to speed analyst review
- Continuously tune detection models to improve accuracy
best sanctions screening practices
An effective sanctions screening process requires advanced tools and human oversight working together. Embedding best practices ensures accuracy, reduces operational strain, and strengthens overall resilience. Five essentials include:
- Adopt a risk-based approach: Focus resources on higher-risk relationships and transactions.
- Maintain updated technology: Deploy algorithms that handle subtle name variations, real-time checks, and automated sanctions list updates.
- Establish escalation procedures: Define clear protocols for investigating matches and documenting outcomes.
- Conduct regular testing and validation: Simulate scenarios and perform independent reviews to ensure detection effectiveness.
- Train staff continuously: Keep teams informed on regulatory changes and emerging risks.
Once these practices are in place, advanced technology can take compliance capabilities to the next level.
how to improve sanctions screening processes with AI
Agentic AI, Generative AI (GenAI), and machine learning are transforming AML compliance by automating critical tasks and uncovering risks traditional systems miss. Unlike rule-based tools, machine learning processes vast volumes of customer and transaction data to detect anomalies with greater precision.
- Transaction monitoring: Identifies subtle behaviour-driven signals faster and more accurately.
- Customer due diligence (CDD): Enhances risk profiling by evaluating behaviours, histories, and external data.
- Fraud detection: Adapts in real time to new schemes, boosting institutional resilience.
The effectiveness of a sanctions program depends on how performance is measured and improved over time.
The critical role of human oversight
While technologies can reduce false positives in sanctions screening by up to 50% and improve detection rates by 40%, technology alone cannot guarantee compliance. Skilled compliance professionals are essential for interpreting complex alerts, investigating high-risk cases, and making judgment calls. Combining advanced tools, real-time screening, anomaly detection, and automated reporting with human oversight ensures faster, more accurate, and contextually informed screening, reduces false positives, and strengthens regulatory confidence.
The sanctions compliance KPIs
The strength of a sanctions screening program lies not only in tools and human oversight but also in the ability to measure success. Sanction compliance KPIs provide early warning signals, helping institutions detect gaps before they escalate into breaches.
The KPIs include:
- Sanction compliance rate: Percentage of breaches prevented versus total incidents
- False positive rate: Efficiency in filtering irrelevant alerts
- Audit findings: Number and severity of regulatory observations
- Training coverage: Proportion of staff trained on current sanction rules
Good KPIs are simple, relevant, and directional, clearly showing whether performance is improving. Regularly tracking these metrics helps organisations protect against financial, reputational, and operational risks while aligning with evolving laws.
Ultimately, success comes from blending advanced technology with domain expertise and strong measurement frameworks. As regulators continue to raise expectations, organisations that modernise their sanctions screening today will not only avoid costly penalties but also build long-term resilience and trust with customers, regulators, and partners.
how can Infosys BPM optimise AML and sanctions compliance?
Infosys BPM offers a holistic Financial Crime Compliance (FCC) approach that blends advanced technology with deep domain expertise to help enterprises strengthen AML and sanctions compliance. From AI-driven productivity gains to machine learning models that detect anomalies in real time, we deliver practical solutions that reduce risk and improve efficiency. We empower organisations to optimise compliance operations while adapting confidently to evolving regulatory demands.
