The shift towards real-time payments is forcing financial institutions to reconsider how they identify and prevent sanctions breaches. As money moves between accounts in seconds, compliance teams have less time to assess transaction risks, investigate potential matches and intervene before funds reach restricted individuals or entities. This is putting greater pressure on the screening systems banks and payment providers depend on to meet their anti-money laundering (AML) obligations.
RegTech provider ZIGRAM highlights payment screening as a critical safeguard in this environment, particularly as payment volumes and processing speeds increase. The technology enables institutions to assess transactions against sanctions lists, watchlists and other risk indicators before funds are transferred.
Screening typically examines information contained within payment instructions, including sender and beneficiary details, financial institutions, intermediaries, jurisdictions, account information and transaction references. The objective is to identify potential exposure to sanctioned parties or other financial crime risks and determine whether a payment can proceed or requires further investigation.
Cross-border transactions can make this process particularly complicated. Names may appear differently depending on language, spelling conventions and transliteration, meaning screening systems must recognise potential matches beyond exact name comparisons. FATF Recommendation 16 also establishes international standards for the originator and beneficiary information that must accompany payment transactions.
The screening process begins by extracting relevant information from payment instructions and comparing it against applicable sanctions lists and watchlists, including the United Nations Security Council Consolidated List.
When similarities are identified, the system generates an alert, potentially accompanied by a risk score to help compliance teams prioritise investigations. However, a potential match does not necessarily indicate a sanctions violation. Individuals and businesses can share similar names, making additional verification essential before a decision is reached.
Compliance analysts can assess geographical information, identifying details and existing customer records to establish whether an alert represents a genuine risk. Depending on the outcome, the transaction may be released, held, escalated, rejected or blocked. Institutions must also retain records of the screening process and the rationale behind decisions to demonstrate compliance and support regulatory audits.
Payment screening should also be distinguished from transaction monitoring, although both are important components of an institution’s financial crime controls.
Payment screening evaluates individual transactions as they are processed, focusing on the parties involved and their potential exposure to sanctions or other watchlists. Transaction monitoring takes a broader approach by analysing customer activity over time to identify unusual behaviour and suspicious patterns.
For example, a customer making multiple small transfers across different accounts before rapidly consolidating the funds could trigger a transaction monitoring alert. Payment screening would instead assess the individual transfers against relevant sanctions and risk information. Neither control can replace the other, meaning financial institutions need both to maintain an effective AML framework.
However, the effectiveness of screening programmes is increasingly challenged by operational limitations. False positives remain a persistent problem, with broad matching criteria generating alerts on legitimate customers and transactions. Legacy systems can produce false-positive rates of 30-50%, while better configured or automated screening can reduce this figure to below 5%, according to the source material.
The growth of instant payments introduces further complications by compressing the time available for compliance checks. Institutions must identify potential sanctions exposure without unnecessarily delaying legitimate transactions. Incomplete payment information, inconsistent data formatting and frequently changing sanctions lists can make accurate screening more difficult.
Fragmented compliance infrastructure can also slow investigations. When customer information, transaction alerts and investigation tools are held across separate systems, analysts can spend considerable time gathering the necessary context rather than assessing potential risks.
To strengthen screening capabilities, institutions need reliable payment data, regularly updated watchlists and appropriately calibrated matching thresholds. Regular reviews of false-positive rates, prioritisation of higher-risk alerts and comprehensive audit trails are also important for maintaining effective controls.
Screening solutions are increasingly expected to support real-time processing, fuzzy name matching, configurable rules, payment-message analysis and integrated investigation workflows. Connecting these capabilities with transaction monitoring systems can give compliance teams a more comprehensive view of financial crime exposure.
ZIGRAM’s Transact Comply aims to address these requirements by bringing payment screening and transaction monitoring together within a single environment. Its capabilities include configurable rules, risk scoring, alert generation and investigation workflows designed to support financial institutions managing transaction-related risks.
As instant payments become more widely adopted, the pressure on AML infrastructure is unlikely to ease. Financial institutions must balance the need for rapid payment processing with their responsibility to identify and prevent prohibited transactions. Improving screening accuracy, reducing unnecessary alerts and strengthening investigation processes will be central to maintaining effective financial crime controls.
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