Financial crime is a global issue that requires effective tools to detect and prevent suspicious activities. One of the most important tools in the fight against money laundering and other financial crimes is AML watchlist screening.
By regularly checking individuals, businesses, and transactions against official sanction lists, companies can identify and avoid high-risk business relationships.
This article explains how AML watchlist screening works, why it is necessary, and how businesses can ensure their screening process is both effective and up to date.
What is AML watchlist screening?
AML watchlist screening is a process where companies and financial institutions check their customers and business partners against various watchlists.
These may include sanctioned individuals and organisations, politically exposed persons (PEPs), and other high-risk categories based on factors such as adverse media coverage or legal convictions.
The purpose of screening is to ensure that businesses do not unknowingly engage with high-risk entities. By implementing a thorough screening process, organisations can reduce legal risks, strengthen compliance, and protect their brand.
Sources for watchlists in AML screening
AML screening relies on data from various international and national sources. Some of the most significant include:
- EU Sanctions List – A register of individuals, businesses, and countries subject to EU restrictions.
- FATF’s High-Risk Countries List – A compilation of countries with inadequate measures against money laundering and terrorist financing.
- Interpol and Europol – Databases of wanted individuals, criminal networks, and other actors involved in financial crime.
- National Sanctions Lists – Each country has its own lists of individuals and businesses deemed a risk to the financial sector.
- OFAC (Office of Foreign Assets Control, USA) – A list of individuals and companies subject to economic sanctions by the U.S. government.
By using these databases as references, businesses can identify suspicious individuals and organisations and take action before establishing a business relationship.
How does AML screening work?
AML screening is performed at several key points to ensure that businesses always have up-to-date information about their customers and business partners:
- During onboarding – When a new customer registers, a check is performed to ensure they are not on any lists such as sanction lists, PEP lists, and law enforcement lists.
- Ongoing monitoring – Because risk-related information is constantly changing, businesses must conduct recurring checks to stay updated on any new red flags linked to their existing customers.
- Transaction-based screening – Payments and transfers can be analysed in real time to detect links to high-risk entities.