Sanctions Checks

What is a financial sanction?

A financial sanction is a legal restriction, usually implemented in order to limit or ban trading by specific individuals, organisations, and even whole countries that have committed financial crime or misconduct. When companies conduct a sanctions check, any sanctions on a company or individual are flagged.

As outlined by the Office of Financial Sanctions Implementation, there are three different types of financial sanctions in the UK. These are defined as:

• Targeted asset freezes

• Restrictions on a wide variety of financial markets and services

• Directions to cease all business

What is a sanctions check?

A sanctions check is the term used to describe the process of searching sanctions lists for your potential client or customer to make sure that they do not have any historic or current financial sanctions levied against them. 

What information is used in a sanctions check?

Having the ability to accurately and confidently identify information is essential when you want to distinguish between a genuine sanction result and one from an unrelated person or organisation with a similar name.

For an individual, the information used when performing a sanctions check can include:

• A full name, and any former names or aliases
• Date of birth
• Nationality and country of residence
• The current and any previous addresses
• Passport or other identification details
• Occupation, employer and any known business interests
  
  

For a business or other legal entity, relevant information for a sanctions check can include:

• Any trading and registered names
• The registration number of the company
• The country of incorporation and the registered address
• The names of any directors and company officers
• Details of shareholders and any ultimate beneficial owners
• The details of people who exercise direct or indirect control
  
  

Having reliable and trustworthy Know Your Customer information and customer due diligence systems in place provides the verified identity and ownership data needed in order to be able to screen accurately and to then investigate potential matches.

Who needs to conduct sanctions checks?

All businesses across a range of sectors are required to carry out sanctions screening. The main sectors you can expect to carry out sanctions checks include:

• Accounting companies

• Legal businesses

• Financial institutions

• Banks

• Property developers

• Investors

• Insurance firms

Who and what should be screened?

With sanctions screening, it’s not a case of limiting checks to one specific named customer. The screening should reflect the whole relationship, which means also performing checks on transactions, as well as on the organisation’s geographic and sector exposure.

Screening will depend on the individual circumstances, but it can include:

• Checks on the individual and corporate customers
• Identifying directors and company officers
• Understanding who the shareholders and ultimate beneficial owners are
• Knowing the people who exercise ownership or control
• The trustees, beneficiaries and authorised representatives
• Any suppliers, contractors, agents and intermediaries involved
• Understanding transactions, including who the payment recipients, senders and transaction counterparties are
• Checks on vessels or other assets covered by the relevant sanctions regime
  
  

A company may still find that it is subject to financial sanctions even if it’s not named on a sanctions list, where it is owned or controlled by a designated person. Understand more about how sanctions evasion is changing and why it’s so important that screening looks beyond a basic company-name check.

How do sanctions screenings work?

A sanctions screening involves screening individuals against a number of sanctions lists across the world. For example, SmartSearch uses the Dow Jones WatchList to carry out sanctions checks. This database comprises 1,100 different public and private lists sourced internationally. 

These tools will automatically check the data entered and flag any sanctions or restrictions on a client or individual. 

What is the sanctions screening process?

The sanctions screening process usually follows six specific checks, with the steps including:

1. Collect and verify customer information

First, you will need to confirm and verify the identity of the customer, along with collecting sufficient information about any connected individuals, businesses, beneficial owners, or controllers.

2. Identify ownership and control

It’s important to establish who ultimately owns or controls a business. A company may appear to be unlisted following a sanctions check; however, an unlisted company may still be subject to restrictions if it is owned or controlled, directly or indirectly, by a designated person.

3. Screen against relevant sanctions data

Collect and compare the information gathered with the sanctions lists and risk data that apply to the customers, activities, and jurisdictions of the organisation.

4. Apply appropriate name matching

A simple exact-match name search could miss out on a whole host of information held under alternative information, whereas screening tools can pick up on alternative spellings, aliases, transliterations, and abbreviations, etc., in order to identify all relevant records.

5. Investigate potential matches

Once all of the information is gathered, it needs to be compared. Check the addresses, ID details, dates of birth, company details, ownership records, and nationalities, so that it can be determined whether or not an alert is a false positive or a likely target match.

6. Escalate and record the decision

The information gathered from the checks needs to be recorded. It’s essential to document the evidence that’s been reviewed, along with the conclusion reached and any action taken that has been deemed necessary. This is the case with genuine or unresolved matches, as all should be escalated in line with the organisation’s sanctions policy and legal obligations.

To find out more about this, you can read what a sanctions check is and how the screening process works.

When do sanction checks take place?

Sanction screening checks should take place before new clients are onboarded, using fast-acting screening software like TripleCheck to ensure any matches or potential risks are quickly identified and can be addressed. If sanctions have been identified, this should be reported to the appropriate senior staff and AML compliance officers to ensure further checks are carried out before moving forward. 

Why is ongoing sanctions monitoring important?

Sanctions checks should never be treated as a one-off process, carried out during onboarding and never again. Information can change throughout the business relationship; lists, customer circumstances and ownership structures can all be updated at any stage, so it’s crucial to carry out ongoing monitoring throughout.

Ongoing monitoring can help to identify:

• If a customer or a connected party has been added to a sanctions list
• Whether a new alias, address or another identifying detail has been added
• If there has been a change in directors, shareholders or beneficial ownership
• If a business has become owned or controlled by a designated person
• If there has been any new exposure to a sector, restricted country, or to a new transaction type
• If there have been any changes to sanctions restrictions, exemptions or licences
• If new information suggesting the use of intermediaries or sanctions-evasion techniques is now appearing within the checks
  
  

Knowing when and how often to conduct monitoring checks should reflect the level of risk that’s been identified. Learn more about what ongoing monitoring means in AML and why customer screening must continue after onboarding.

Who imposes sanctions in the UK?

Any financial sanctions that are imposed by the United Nations must be implemented by the countries they are relevant to – they can use Resolutions passed by the UN Security Council to do this.

The European Union must also implement all financial sanctions which are imposed by the UN, but the EU can impose its own financial sanctions on member states too, including the UK.

The United Kingdom has some measures in place to ensure that EU and UN sanctions are adhered to. According to the OFSI, there are regulations which will ‘impose penalties for breaches of EU regulations’. 

In some circumstances, the UK also has the capacity to impose its own domestic sanctions, under legislation like the Sanctions and Anti-Money Laundering Act 2018, or the Anti-Terrorism, Crime and Security Act 2001.

Which data sources are used for sanctions screening?

Below are the key sources used to help identify key information within sanctions checks:

The UK Sanctions List

This list is the official source for all current UK sanctions designations. Since the closure of the former OFSI Consolidated List on 28 January, 2026, it has actually been the sole source for UK designations.

Entries can include names, any aliases that may be used, dates of birth, addresses, nationalities, ID details, any relevant sanctions regime details and the measures imposed.

International sanctions lists

Businesses that operate internationally may also need to consider lists for other countries, such as those issued by bodies like the European Union, the United Nations, the United States Office of Foreign Assets Control, and other national authorities.

Commercial watchlist data

The benefit of commercial data providers is that they can consolidate information from a range of official sources, but enrich it with identifiers and alternative aliases that offer much more effective matches.

In order to learn more about the information that’s most often used to identify designated parties, read our information on sanctions lists.

Sanction Screening and AML Compliance

PEP screening is a part of sanctions screening and is an important element of AML compliance as well as your company’s fraud prevention strategies. It is illegal to do business with an individual, corporation, or country that breaks the terms of the sanctions placed upon them, and companies must ensure they conduct checks to avoid damage to their own institution.

There are some exceptions to this law, but even in these instances you need a licence to work with anyone who has been sanctioned. Whether your dealings with a sanctioned customer are conscious or not, they increase how vulnerable your business is to financial crimes like money laundering.

How do sanctions checks support AML, KYC and CDD?

Even though compliance relating to sanctions and AML compliance are both uniquely different, the controls used to support both often overlap.

A successful and fruitful anti-money laundering process will utilise verified identity, ownership and customer-risk information to ensure a trustworthy screening process that can be escalated fairly.

In essence, KYC will confirm who the customer is and that accurate information is in place, while customer due diligence ascertains the purpose of the relationship, along with beneficial ownership and a wider risk profile. The reason behind this is to help compliance teams tell the difference between a false positive that may show up and a genuine sanctions exposure. They can then start to dig deeper into identifying any unlisted entities that may be owned or controlled by a designated person.

It’s important to remember that even a pass on an identity or anti-money laundering check doesn’t remove the need to check specific sanctions regimes, restrictions, and ownership or control rules relevant to the relationship, as these may still highlight risks that need monitoring.

What happens if your business does not conduct sanctions screening?

If you fail to conduct sanctions screening, not only do you put your company at huge risk of financial crimes, fraud, and money laundering schemes, but your company can also face criminal charges. 

Not only do you need to carry out sanctions checks, but any sanctions must be reported to OFSI. Failure to comply with these regulations can result in hefty fines, with recorded cases of over £20m in penalties and up to 7 years' imprisonment. 

What happens when a potential sanctions match is identified?

When a sanctions match is made, this isn’t the end of the process, due diligence is then needed to understand fully whether or not the match is in fact the designated person or entity. The result will need to be investigated thoroughly before a final decision is made and recorded.

A proportionate response can include:

• Comparing all identifiers found with the sanctions-list record
• Looking into any connected businesses, beneficial owners and controllers
• Finding out for sure if the result is a false positive or, indeed, a likely target match
• Setting out to identify the relevant sanctions regime and any restrictions
• Putting a stop (or at least suspending) activity where necessary
• Deciding to escalate the case to the appropriate team, be that legal, compliance or another senior team
• Deciding on whether assets should be frozen or if a report should be made to OFSI
• Understanding if an exemption or a licence applies
• Keeping a record of the evidence collected, conclusion made and the action taken
  
  

A sanctions alert should never be treated as an automatic approval or rejection. In every case, it’s necessary that the applicable law, licensing position, ownership and control rules, and supporting evidence of the match, all be considered first.

SmartSearch Sanctions Checks

Even if you do have access to all the sanctions lists required to do a thorough screening, carrying out these checks manually is a time-consuming, inefficient process, with no guarantee that you won’t miss something.

SmartSearch’s sophisticated platform carries out automated screening for sanctions as part of a series of comprehensive anti-money laundering checks. We can find a match for your potential customer or client, even if they’re registered with a nickname or an abbreviation. We weed out the false positives too, so you won’t waste time carrying out due diligence on the wrong individual.

Automate sanctions and PEP screening

With personal details, sanctions lists and ownership structures all having the ability to change at any stage of the relationship, automated screening and ongoing alerts can help compliance teams to spot those changes quickly and consistently.

SmartSearch’s sanctions and PEP screening solution helps businesses:

• Screen individuals, businesses, directors and beneficial owners
• Search through global sanctions and PEP data
• Uncover aliases, alternative spellings and abbreviations, so nothing goes unnoticed
• Delve into potential matches to confirm and reduce any false positives
• Conduct ongoing monitoring for existing customers
• Stay aware with the help of alert notifications when new risks have been uncovered
• Keep and update a record for all checks and decisions

FAQs

What information is needed for a sanctions check?

For an individual customer, businesses need to collect a sufficient amount of identification information; details such as their full name, date of birth, their address, and nationality, for example. For companies, the necessary information will be more around the entity itself: the registered name, the registration number, the jurisdiction and address, and who the company directors, shareholders, beneficial owners and controllers are.

How often should sanctions checks be completed?

This can vary depending on the level of risk involved. An onboarding check should always be completed, along with additional checks whenever there is a new, relevant transaction at any point during the relationship. How often additional checks and rescreening will take place will depend on the organisation’s sanctions risk. Automated monitoring can be hugely beneficial in these circumstances as they help identify list and customer changes between scheduled reviews.

Does a sanctions alert mean the customer is sanctioned?

No, this isn’t necessarily the case. An alert simply means that some information has been flagged as resembling a sanctions-list entry, but additional checks and comparisons will need to be carried out so that it can be determined if the result is a false positive or a likely target match.

Should beneficial owners be screened?

Yes, beneficial owners will also need to be screened. Conducting only company name screens may mean you miss a designated person who owns or controls the organisation and who does present a risk. It’s important that thorough checks are completed for all relevant owners and controllers as part of KYC and CDD.

Can an unlisted company still be subject to sanctions?

Yes. It’s possible for financial sanctions to apply to an entity that is owned or controlled, directly or indirectly, by a designated person. This can even be the case without the entity appearing separately on the UK Sanctions List.

Is the OFSI Consolidated List still used?

No. As of 28 January 2026, the OFSI Consolidated List is no longer in use. Now, the UK Sanctions List is the sole official source for all current UK sanctions designations.

Are sanctions and PEP checks the same?

No. They both hold very different functions. Sanctions screening is used to identify parties who are subject to legal restrictions, whereas PEP screening is used to understand whether people who hold or who previously held prominent public functions may need enhanced due diligence. A person has the ability to fall into either or both of these categories.

Are sanctions checks only relevant to banks?

No. Sanctions requirements can affect any organisation, so long as they’re offering goods, funds, services or economic resources to other parties. Any controls deemed necessary should be a reflection of the company’s activities, counterparties and any geographic exposure.

Do sanctions checks replace KYC or CDD?

No, this isn’t the case. Sanctions screening is just one part of a much wider compliance process. KYC and CDD provide their own part within this process by verifying identity, ownership, and risk information necessary in order to accurately screen and investigate any alerts.

Can a business work with a sanctioned person?

This very much depends on the sanctions regime and the type of restrictions in place, so businesses would need to confirm their legal position before proceeding. It may be the case that a specific exemption applies or an appropriate licence has been issued, meaning that continuing with the relationship may be possible; however, if this isn’t the case, then it may be prohibited to do so.