How to Prevent False Positives in Sanctions Screening

1. Introduction

False positives in sanctions screening can create unnecessary workload, delay legitimate transactions, and increase operational costs. While eliminating them entirely is impossible due to the need for strict compliance, organizations can adopt technical measures to significantly reduce their frequency.

2. Understanding False Positives

A false positive occurs when the screening system incorrectly flags a transaction, customer, or entity as a potential match to a sanctions list entry, despite there being no actual match.
Common causes include:

• Incomplete or inaccurate reference data
• Overly broad matching rules
• Names that are common or have many variations
• Transliteration and spelling differences

3. Consequences of High False Positive Rates

High false positive rates:

• Slow down processing times
• Increase operational costs
• Create unnecessary compliance workload
• Risk delayed customer onboarding or payments

From a regulatory perspective, excessive false positives may also indicate inefficient tuning of screening systems.

4. Our Approach to Reducing False Positives

Our sanctions screening process is fully automated and configured to minimize false positives through precise rule settings and data quality controls. Screening parameters are narrowly defined to match only relevant identifiers, avoiding overly broad logic that can generate unnecessary alerts. Reference data sources are validated and updated regularly to ensure accuracy. The system applies deterministic matching logic with strict thresholds, so only records that meet defined compliance criteria trigger alerts. This approach maintains regulatory alignment while reducing the volume of non-relevant matches.

5. Key Recommendations for Compliance Teams

• Regularly update reference data — Ensure sanctions lists and watchlists are kept current.
• Optimize matching rules — Avoid overly broad search parameters.
• Validate system configurations — Confirm that thresholds are set in line with regulatory expectations.
• Conduct periodic reviews — Even in fully automated environments, conduct system audits to confirm performance.

6. Conclusion

Reducing false positives in sanctions screening is a balance between compliance obligations and operational efficiency. By using precise automated parameters, high-quality data, and structured system logic, organizations can meet regulatory requirements while minimizing unnecessary alerts.