Money services businesses (MSBs), including remittance companies, currency exchangers, and payment processors, are vital to global financial inclusion but also face heightened regulatory scrutiny. Their frequent processing of international and high-volume transactions makes MSBs prime targets for sanctions enforcement actions.
Sanctions are government- or organization-imposed restrictions that prohibit dealings with designated individuals, entities, or countries. Major sanctions regimes include the United Nations, the U.S. Office of Foreign Assets Control (OFAC), the European Union, and the U.K.’s Office of Financial Sanctions Implementation (OFSI). For MSBs, failing to screen customers and transactions against these lists can lead to severe fines, loss of licenses, and reputational harm.
A well-structured sanctions screening program helps MSBs remain compliant, avoid penalties, and protect customers and partners from exposure to sanctioned entities.
Key Principles of Sanctions Screening
Sanctions screening for MSBs requires a systematic approach to ensure compliance across all service channels, whether cash-based, online, or agent-facilitated. The following best practices underpin effective programs:
- Risk-based screening: Prioritize higher-risk services such as cross-border transfers, foreign exchange, and digital wallets for enhanced due diligence.
- Comprehensive list coverage: Screen against OFAC, UN, EU, and OFSI lists, as well as any jurisdiction-specific lists tied to your operating markets.
- Advanced matching technology: Use name-matching algorithms and fuzzy logic capable of identifying variations, transliterations, and aliases.
- Defined escalation and audit processes: Document how alerts are reviewed and resolved, ensuring traceability for regulators.
- Regular training and testing: Train compliance officers and agents on sanctions rules and verify that systems work as intended.
To better understand the regulatory landscape, see Alessa’s overview of OFAC sanctions lists and screening requirements.
Sanctions Screening Checklist for MSBs
This checklist consolidates compliance best practices tailored to MSBs, helping you design and evaluate your sanctions screening framework.
Governance and Policy
| Checklist Item | What to Do |
| Define sanctions compliance policy | Develop a clear policy outlining compliance objectives, roles, and escalation protocols for both headquarters and agent networks. |
| Identify relevant regimes | Determine which sanctions programs apply to your operations based on transaction corridors and jurisdictions served. |
| Conduct a sanctions risk assessment | Evaluate customer types, transaction patterns, and delivery channels to assess risk exposure. |
| Maintain current lists and policies | Subscribe to official sources or vendors that update sanctions lists daily or in real time. |
Data Collection and Integration
| Checklist Item | What to Do |
| Collect comprehensive customer data | Capture names, birthdates, addresses, nationalities, and ID details for senders, recipients, and agents. |
| Integrate screening into transaction systems | Embed sanctions checks in customer onboarding, transaction approval, and payout processes. |
| Use multiple data sources | Combine global sanctions lists (OFAC, UN, EU, OFSI) with any local or regional lists relevant to MSB operations. |
| Maintain accurate and standardized data | Implement data validation and normalization to reduce false positives. |
Screening Execution
| Checklist Item | What to Do |
| Implement advanced sanctions screening software | Leverage AML compliance tools designed for MSBs. Solutions like Alessa’s sanctions and watchlist screening module provide real-time matching and audit capabilities. |
| Configure risk-based parameters | Calibrate matching thresholds based on transaction type and geography to focus attention on higher-risk activity. |
| Conduct both real-time and batch screening | Screen customers and payments prior to execution and rescreen existing profiles periodically. |
| Document all alerts and actions | Maintain records of flagged transactions, reviews, and final decisions for regulatory audits. |
| Define escalation procedures | Specify review levels and reporting requirements for potential matches or confirmed hits. |
Monitoring and Maintenance
| Checklist Item | What to Do |
| Perform ongoing screening | Rescreen customer and agent data whenever new sanctions are issued or updated. |
| Continuously monitor for list updates | Automate feeds from sanctions authorities to keep internal lists synchronized. |
| Test and validate systems | Regularly conduct quality assurance tests to ensure detection accuracy. |
| Train and certify staff | Provide recurring training on sanctions compliance and alert management. |
| Conduct internal audits | Review compliance program effectiveness annually and update procedures as needed. |
Handling Matches and Alerts
| Checklist Item | What to Do |
| Investigate potential matches | Gather additional data and verify whether alerts correspond to true or false matches. |
| Escalate findings as per policy | Follow defined workflows for approvals, freezes, or transaction blocks. |
| Maintain comprehensive records | Store investigation notes and decision outcomes for regulator review. |
| Report confirmed sanctions breaches | Notify relevant authorities promptly in line with legal reporting obligations. |
Moving Forward with Sanctions Screening
MSBs operate in one of the most closely monitored segments of the financial industry. Building an effective sanctions screening program is therefore essential to maintaining trust, avoiding enforcement actions, and supporting responsible growth.
By investing in robust technology and risk-based processes, MSBs can streamline compliance and focus on serving customers securely. Alessa enables real-time screening, automated alert handling, and a complete audit trail, helping compliance teams meet their obligations efficiently.
A proactive, well-documented screening framework not only protects your business from penalties but also reinforces your commitment to transparency and financial integrity.
Alessa