A payment can pass through every routine check and still present a serious financial crime risk. A beneficiary name may resemble a sanctioned individual, an intermediary bank could be subject to restrictions, or a payment reference might contain details linked to a designated entity. Identifying these risks before funds are transferred is becoming increasingly challenging as payment processing accelerates.

According to RegTech provider ZIGRAM, payment screening remains a fundamental part of financial crime prevention, particularly as instant payment infrastructure leaves institutions with less time to identify and investigate suspicious transactions.

Payment screening involves checking transaction information against sanctions lists, watchlists and other risk indicators before a transfer is processed. Depending on the payment, this can include details about the sender, beneficiary, financial institutions, intermediaries, jurisdictions, account information and payment references.

The objective is to identify potential matches and determine whether a transaction can proceed or requires further investigation. Cross-border payments introduce additional complexity, as institutions must account for different naming conventions, languages and regulatory requirements. FATF Recommendation 16 also establishes international standards for the originator and beneficiary information that must accompany payment transactions.

The screening process typically begins with extracting relevant information from a payment instruction. This data is then compared against applicable sanctions lists and watchlists, including the United Nations Security Council Consolidated List.

However, identifying potential matches is not always straightforward. Names can appear differently across jurisdictions because of transliteration, spelling variations and aliases. Screening technology must therefore account for similarities rather than relying exclusively on exact name matches.

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