Payment screening
Also called transaction screening, payment filtering, wire screening
Payment screening is the check of a payment's parties and details against sanctions and watch lists before the payment is processed. Names, banks, countries, vessels and free text in the message are compared with lists such as OFAC's SDN list. A possible match stops the payment until an analyst clears or blocks it.
How it works
The screening filter reads each payment message field by field, including originator, beneficiary, intermediary banks, addresses and remittance text. Fuzzy matching catches spelling variants and transliterations. Hits go to an analyst who compares them with the list entry and releases, rejects or blocks the payment. Blocked funds are frozen and reported to the sanctions authority. Firms tune match thresholds to balance missed hits against false alerts.
A single payment to a sanctioned party can breach sanctions law, and US sanctions apply strict liability. Payment screening is the last control before money moves. Instant payments compress the time available for review. EU rules on instant credit transfers now require daily screening of customer bases instead of checking every instant transfer, which moves the work from the payment to the account.
The rules
Requires reports to OFAC of blocked property and rejected transactions within 10 business days; the 21 March 2025 final rule extended record keeping to 10 years.
US persons, including US banks and their branchesRequires firms offering instant euro transfers to screen all customers at least daily and immediately after new listings, instead of screening each instant transfer.
Payment service providers offering euro instant credit transfersRequires originator and beneficiary information to travel with payments so firms can screen and monitor them.
Banks and payment providers in FATF member jurisdictionsCommon questions
How is payment screening different from name screening?
Name screening checks customers when they are onboarded and at regular intervals. Payment screening checks every party and detail in each transaction, including counterparties who are not the firm's customers.
What happens when a payment matches a sanctions list?
The payment stops. An analyst checks whether the hit is a true match. A true match is blocked or rejected and reported to the sanctions authority. A false match is released and the reason recorded.
Which lists are used for payment screening?
Firms screen against the lists that apply to them, usually OFAC's SDN list, the EU consolidated list, the UK sanctions list and UN lists. Many add internal lists of high-risk parties.
