Screening Glossary

Plain-language definitions of the sanctions, AML, and due diligence terms that appear in screening results, compliance policies, and audit files.

01What is sanctions screening?Sanctions screening compares a person, company, vessel or financial institution against government sanctions lists, at onboarding and repeatedly afterwards, so that a regulated firm does not deal with a designated target or with its blocked property.
02What is a sanctions list?A sanctions list is the register a government or international body publishes naming the persons, entities, vessels and aircraft subject to restrictive measures such as asset freezes and trade bans. Being on it is a legal status, not a risk rating.
03What is an SDN (Specially Designated National)?Find a counterparty on the SDN List and the question stops being about risk. An SDN is a person, entity, vessel or aircraft named on the US Treasury list whose property within US jurisdiction is blocked, and with whom US persons are generally prohibited from dealing.
04What are OFAC's non-SDN lists (SSI, CAPTA, NS-MBS)?A hit that is not on the SDN List is not automatically nothing. OFAC's non-SDN registers, among them the Sectoral Sanctions Identifications List, the CAPTA List of banks facing correspondent-account restrictions and the NS-MBS List, carry narrower prohibitions than a full asset freeze.
05Consolidated sanctions lists: which file covers what?A consolidated sanctions list is a single file in which an authority publishes the designations made under its various regimes, so a screening system loads one dataset instead of dozens of annexes. Each authority means something slightly different by the word.
06What is the OFAC 50 percent rule?Two designated people hold 30 percent each of a trading company that appears on no list. Their stakes aggregate, and under OFAC's 50 percent rule the company is blocked as if it had been named: any entity owned 50 percent or more by blocked persons is itself blocked.
07What are sectoral sanctions?Sectoral sanctions restrict specific activities in a named sector of a target economy, such as raising new debt or equity or supplying deep-water drilling services, rather than freezing the assets of the parties involved.
08What are comprehensive sanctions?Comprehensive sanctions prohibit substantially all trade, financial and service dealings with a target jurisdiction or its government rather than with named individuals. They work as a territorial embargo, subject to narrow licences and humanitarian exemptions.
09What are secondary sanctions?Secondary sanctions do not prohibit a non-US firm's conduct. They put a choice in front of it: keep dealing with the target, or keep access to the US financial system. They reach non-US persons for conduct occurring entirely outside US jurisdiction.
10What is a general licence (sanctions)?A general licence is a published authorisation permitting a defined class of transactions that sanctions would otherwise prohibit. Anyone meeting its terms may rely on it without applying, and most carry conditions, reporting duties and an expiry date.
11What is a designation (sanctions)?A designation is the formal decision by a sanctions authority to name a person, entity, vessel or aircraft as a target of restrictive measures. It creates the legal status that triggers asset freezes and prohibitions from its stated effective date.
12What is delisting (sanctions)?A party you blocked last year has been removed from the list. Delisting is that removal by the designating authority: from the effective date the prohibitions no longer apply and frozen assets are released, subject to the authority's conditions.
13What is an asset freeze?An asset freeze bars dealing with a designated person's funds and economic resources, and separately bars making funds or economic resources available to them, directly or indirectly. The assets stay where they are; ownership does not pass to the state.
14What is a politically exposed person (PEP)?A PEP flag is not an allegation. It records that an individual is or has been entrusted with a prominent public function, along with their family members and close associates, and that the relationship calls for enhanced measures rather than a refusal.
15What are relatives and close associates (RCAs)?Relatives and close associates are the family members and business partners of a politically exposed person. They are not PEPs themselves, and AML rules still extend the same enhanced due diligence to them, because assets and influence are routinely held through them.
16Domestic vs foreign PEP: what is the difference?A foreign PEP holds a prominent public function in another country; a domestic PEP holds one in the country where the firm operates. Under the FATF standards foreign PEPs always attract enhanced measures, while domestic PEPs are handled on a risk-sensitive basis.
17What is adverse media screening?Lists lag reality. Adverse media screening is the search of news, court reporting and other public sources for negative information about a counterparty, from fraud and corruption to sanctions evasion, organised crime and environmental offences.
18What is a criminal watchlist?A person can be wanted for fraud for years without ever appearing on a sanctions list. A criminal watchlist is the law-enforcement register that shows it: people wanted, subject to an international alert, or otherwise sought in connection with criminal proceedings.
19What is an Interpol Red Notice?An Interpol Red Notice asks law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender or similar action. INTERPOL issues it at the request of a member country, on the basis of a national warrant. It is not an international arrest warrant.
20Interpol notice vs diffusion: what is the difference?Diffusions are the part of INTERPOL you cannot see. A diffusion is a request or alert sent by a National Central Bureau directly to chosen countries and recorded at the same time in an INTERPOL police database, without publication to all member countries.
21What is a denied party list?The phrase is used two ways. Narrowly it means the US Denied Persons List, naming parties whose export privileges have been denied. Broadly it means the whole family of restricted-party registers a trade-compliance team screens before a shipment moves.
22What is the Entity List (BIS)?The Entity List is a US export-control register, published as Supplement No. 4 to Part 744 of the Export Administration Regulations, naming parties for whom exports of specified items require a licence that is usually reviewed under a presumption of denial.
23What are dual-use goods?Dual-use goods are items, software and technology with civilian applications that can also serve military purposes or weapons of mass destruction. Exporting them normally requires an authorisation from a national licensing authority.
24What is KYC (Know Your Customer)?KYC is the operational name for what AML law calls customer due diligence: identify the customer, verify that identity from reliable independent sources, understand the purpose of the relationship, and keep that understanding current for as long as it lasts.
25What is KYB (Know Your Business)?A company is a legal fiction that can be assembled in a day and dissolved quietly. KYB is due diligence on that fiction: verify the registration, identify the directors and beneficial owners, understand the activity, and screen the entity and the people behind it.
26What is an ultimate beneficial owner (UBO)?The ultimate beneficial owner is the natural person who ultimately owns or controls a legal entity, or on whose behalf a transaction is conducted. EU rules treat a shareholding or voting interest above 25 percent as an indication of direct or indirect ownership.
27What is customer due diligence (CDD)?Customer due diligence is the legally required set of measures: identify the customer and verify that identity, identify beneficial owners, understand the purpose and intended nature of the relationship, and monitor the relationship on an ongoing basis.
28What is enhanced due diligence (EDD)?Enhanced due diligence is where a screening result turns into investigative work: more information gathered, more verification, source of wealth and source of funds established, senior management approval obtained, and closer ongoing monitoring applied.
29What is ongoing monitoring (re-screening)?A customer screened once at onboarding has been measured against a list that has since moved. Ongoing monitoring is the duty to keep the relationship under review: scrutinise transactions, keep documents and data current, and re-screen as the lists change.
30What is batch screening?Compliance duties apply to a portfolio, not only to the next new customer. Batch screening checks many names at once, a customer book, a supplier file, a payroll or an investor register, against sanctions, PEP and watchlist data in a single run.
31What is a false positive in sanctions screening?The moment a screening tool shows you two people with the same name and one of them is on the SDN List, you are looking at a false-positive problem. A false positive is a candidate the system returned that, on review, turns out not to be the listed party.
32What is a false negative in sanctions screening?A quiet alert queue can mean there is nothing to find, or that the configuration is not finding it, and nothing on the screen separates the two. A false negative is a genuine match that screening failed to return: a designated party who passed the check unnoticed.
33What is fuzzy matching in name screening?Fuzzy matching is name comparison that tolerates difference. Instead of demanding identical strings it scores similarity, so spelling variants, reordered words, missing middle names, typing errors and transliteration differences still raise a candidate.
34What is transliteration in sanctions screening?Transliteration is writing a name from one script into another, Cyrillic, Arabic or Chinese into the Latin alphabet. Several renderings of the same name are equally valid, so screening has to compare variants rather than a single spelling.
35What is an alias (AKA) on a sanctions list?An alias, or also-known-as, is an alternative name published alongside a listing: a variant spelling, a former name, a nickname or an assumed identity. Aliases are part of the designation and have to be screened as well as the primary name.
36What is point-in-time evidence?An auditor asks one question about a relationship you approved two years ago: what did you know at the time. Point-in-time evidence answers it, reproducing the screening result as it stood on the date it ran, with the same list versions, candidates and disposition.
37What is an audit trail in compliance screening?The screening ran, the analyst remembers dismissing the candidate, and nothing on file says why. An audit trail closes that gap: the chronological record of what was screened, when, against which sources, what came back, who reviewed it and what they decided.
38What is a risk-based approach?A risk-based approach means identifying and assessing the money-laundering, terrorist-financing and sanctions risks a firm faces, then allocating controls in proportion to them. It is not permission to do less; it is a requirement to justify the level chosen.
39What is the FATF grey list?The FATF grey list is the informal name for jurisdictions under increased monitoring: countries with strategic deficiencies in their anti-money-laundering regimes that have committed to resolve them within agreed timeframes and are actively working with FATF.
40What is OFSI?The Office of Financial Sanctions Implementation, OFSI, is the HM Treasury unit responsible for implementing and enforcing UK financial sanctions. It issues guidance and licences, receives reports of frozen assets, and imposes monetary penalties for breaches.