Sanctions, PEP, and watchlist screening are core components of global financial compliance. Every fintech, bank, and payment platform must screen users, businesses, and transactions against international and local lists to prevent financial crime, corruption, and terrorism financing. Screening happens at onboarding and continuously during all financial activity.
Sanctions Screening
Sanctions lists contain individuals, companies, organizations, and countries that are restricted from using financial systems.
Sources include:
- OFAC (U.S. Department of Treasury)
- EU Consolidated Sanctions List
- UK HMT Sanctions List
- United Nations Sanctions
- GCC national lists
- LATAM regional sanctions lists
What is checked:
- Full name
- Date of birth
- Passport or ID
- Company name
- Ownership structure
- Country of operation
Purpose: Prevents financial transactions with prohibited individuals or entities.
PEP Screening (Politically Exposed Persons)
A PEP is someone who holds a prominent public position or is closely related to someone who does.
Examples:
- Ministers, diplomats, judges
- Members of parliament
- Senior military officials
- CEOs of state-owned companies
- Family members and close associates
Risk: Higher possibility of corruption, bribery, or misuse of funds.
PEP checks include:
- Identity match
- Position verification
- Relationship to public office
- Enhanced due diligence (EDD) if needed
Watchlist Screening
Watchlists include individuals or entities associated with financial crime, fraud, corruption, terrorism, international investigations, or regulatory breaches.
Sources include:
- Interpol
- FBI Most Wanted
- Europol
- National crime databases
- Global adverse media lists
Purpose: Flag high-risk individuals before they enter the system.
Adverse Media Screening
Adverse media scans global news sources for fraud cases, corruption scandals, money laundering investigations, tax evasion, and criminal activity. This alerts compliance teams before onboarding risky users or merchants.
Continuous Screening
Screening is not a one-time event. BinaxPay screens continuously for new sanctions updates, PEP status changes, newly published crime reports, changes in business ownership, and new law enforcement notices. Updates are applied instantly to active users.
Real-Life Example (USA to Saudi Arabia Payment)
A business user from the United States wants to send a payment to a supplier in Saudi Arabia.
- Sanctions Screening (USA)
- Sender’s passport is verified
- Name checked against OFAC, UN, EU lists
- No match, cleared
- PEP Screening
- Sender is not a government official, normal risk
- Recipient business checked
- One director is a former government advisor, flagged as PEP
- Enhanced due diligence is triggered
- Watchlist and Adverse Media
- Supplier checked for global fraud or corruption cases
- No negative results found
- Business activity matches KYB documents
- Final Decision
- Increased monitoring applied
- Payment approved and routed via Saudi local bank rail
Outcome: The transaction is processed safely while meeting U.S. and Saudi compliance requirements.
Summary
- Sanctions screening blocks prohibited individuals and entities.
- PEP screening identifies high-risk political figures.
- Watchlist screening identifies individuals connected to crime or investigation.
- Adverse media screening detects hidden reputational risks.
- Continuous monitoring ensures real-time protection.
These screening layers protect the fintech ecosystem from financial crime and keep all corridors legally compliant.