As we enter 2025, it is becoming even more imperative that you fully identify and authenticate your client’s identity by completing your due diligence obligations. It is also crucial your AML procedures and protocols are effective in combating money laundering and other financial crimes as criminal networks continue to evolve and find more elaborate ways to move illicit funds. This is your guide to PEPs and Sanctions in 2025.

An important element of the due diligence process is validating your client’s status. When we are talking about status, we mean if they are a politically exposed person (PEP), sanctioned in any way, or facing adverse media. Sanctions screening is an essential check that your business must complete to ensure you are taking a risk-based approach and are building a clear picture of exactly who you are working with.

It is even more important that your sanctions screening and checks process are up to the regulatory standards and able to combat financial crime head-on. So, let’s dissect sanctions; we’ll tell you everything you need to know, including the challenges, the types of sanctions placed on individuals and the solutions available to ensure your screening processes are effective and compliant with the regulatory guidelines in place.

A Guide to PEPs and Sanctions in 2025

What Are Sanctions Lists?

Sanctions lists identify parties prohibited from certain activities, such as financial transactions, trade, or travel. These lists are curated and updated by various global and national bodies to reflect shifting geopolitical landscapes. Key sanctions lists include:

  • Office of Foreign Assets Control (OFAC) in the United States
  • UK Sanctions List
  • EU Consolidated Financial Sanctions Lists

Businesses must monitor these lists effectively to avoid engaging with sanctioned entities. Failing to do so can lead to severe legal and financial repercussions.

Sanctions Regulations and Regulatory Bodies

Compliance with sanctions screening is a legal obligation enforced by regulatory authorities worldwide. Among the leading bodies are:

These organisations aim to prevent businesses from inadvertently supporting illegal activities or compromising national security. With geopolitical tensions increasing, 2024 has witnessed a heightened focus on automated solutions and real-time monitoring to meet evolving compliance standards.

Types of Sanctions

Sanctions are diverse in scope, each with distinct implications for businesses. Key types include:

Economic Sanctions – Restrict access to financial resources by freezing assets or prohibiting transactions, as well as targeting individuals, organisations, or governments to exert economic pressure.

Trade Sanctions – Limit the import or export of goods and services to specific regions. This type of sanction is designed to disrupt economic systems while preserving overall market stability.

Travel Bans – Prevent specific individuals, such as Politically Exposed Persons (PEPs) or those involved in criminal activities, from crossing international borders.

Implementing Sanctions Screening: A Step-by-Step Guide

Identifying Relevant Sanctions Lists

Businesses must determine which sanctions lists to monitor based on jurisdiction and operations. Internationally recognised lists include those maintained by the United Nations, the European Union, and the Financial Action Task Force (FATF).

Screening Customers and Transactions

Sanctions screening involves verifying clients and transactions against the identified lists. This process includes:

– Customer Screening: Conducted during Customer Due Diligence (CDD) to flag potential risks early.

– Transaction Screening: Ensures financial dealings do not involve sanctioned parties. Real-time monitoring is critical in high-risk sectors like finance and trade.

Verifying Matches

Not all flagged entities are accurate matches. Businesses must:

– Use contextual analysis to differentiate actual matches from false positives.

– Employ advanced screening software with artificial intelligence to improve accuracy and reduce errors.

– Establish clear protocols for investigating and escalating potential matches.

Maintaining Records

Comprehensive record-keeping is both a regulatory requirement and best practice. Businesses should:

– Log all screening activities, including flagged matches and their resolution.

– Securely store records in compliance with data protection laws like GDPR.

– Periodically review records to identify trends and refine processes.

Updating Screening Practices

Sanctions lists are dynamic, reflecting frequent geopolitical and regulatory changes. Staying compliant involves:

– Automatic updates to sanctions lists through integrated software.

– Regular audits to ensure screening tools are effective.

– Monitoring changes in regulatory frameworks to remain aligned with legal obligations.

Integrating Sanctions Screening with AML Processes

Sanction screening should complement Anti-Money Laundering (AML) efforts, and businesses can enhance compliance by:

– Integrating sanctions screening into Know Your Customer (KYC) protocols.

– Using unified platforms to consolidate AML, KYC, and sanctions screening activities.

– Collaborating with compliance specialists to streamline workflows.

Challenges in Sanctions Screening

Despite technological advancements, businesses face several hurdles in implementing effective sanctions screening, including:

– High False Positive Rates: Traditional systems often flag legitimate entities, wasting resources.

– Data Quality Issues: Inconsistent or outdated data can compromise accuracy.

– Evolving Regulations: Frequent updates demand agile and adaptive systems.

– System Integration: Ensuring compatibility with existing compliance tools can be complex.

Effective Sanctions Screening Solutions

Despite the challenges, there are viable solutions available to businesses operating in the legal, property and finance sectors that need to complete enhanced due diligence and validate the status of their clients.

Innovations in technology have meant there are sanction screening solutions which help businesses establish a clear picture of their client and, more importantly, take that risk-based approach to validate their client’s identity to protect their own business. Technology innovations like Verify 365 are game-changers, enabling businesses to complete due diligence, practice compliantly and onboard new clients efficiently.

Verify 365 is the ultimate AML, KYC and risk and compliance technology platform that ensures you are completing compliant identity and business checks within the set guidelines by the regulation authorities.

Legal professionals tackling the ever-changing AML PEPs and sanctions regulations are assured our innovative, cloud-based and fully automated client onboarding platform enables them to complete thorough client due diligence whether your potential client is a business or individual.

Verify 365’s AML platform has many modules and features that will offer you peace of mind that you are practising compliantly within the set regulations, thereby protecting yourself and your business from potential risk and financial penalties.

The key features include:

– Ongoing PEPs & Sanctions Monitoring – Our technology accesses over 1,400 global PEPs and sanctions lists, providing instant AML reports to businesses during the client onboarding process with ongoing monitoring which lasts for 12 months, or longer, if necessary. This means you are constantly updated on any changes to your client’s status, whether that be the individual or the business.

– Risk-based Alert Frequency – We have access to the latest and up-to-date information to analyse a potential client or business so you can be sure that you have completed the required client due diligence. Incorporating risk-based alerts ensures that your business is notified when a potential high-risk client poses a threat or risk to your practice.

– Differentiated Risk Screening Levels – Classifications and differentiating risk levels are dependent on the regulation authorities. Our comprehensive reports will detail if your client is politically exposed or sanctioned, meaning you can report any concerns, take a risk-based approach and protect your business.

These features are all part of the Verify 365 platform and are very effective. They ease the concern of AML non-compliance practising and enable you to focus on completing through due diligence to identify a client or business within the anti-money laundering frameworks of the regulation authorities.