Customer Screening

What is Customer Screening in AML?

Customer screening in Anti-Money Laundering (AML) is the process of evaluating individuals and businesses to identify potential financial crime risks. It involves comparing customer data against sanctions lists, politically exposed persons (PEP) databases and adverse media sources to detect links to money laundering, fraud or other illegal activities. A key component of this process is customer risk assessment, which helps financial institutions determine the level of scrutiny each customer requires. 

Why Is Customer Screening Important for AML

By proactively screening customers, businesses can ensure compliance with AML regulations, reduce exposure to financial crime and protect their reputation. Here’s why it matters:

• Reducing financial crime risks: Businesses can proactively mitigate risks by identifying customers linked to sanctions, fraud or other illegal activities, preventing exposure to money laundering, terrorism financing and other financial threats that could lead to severe consequences.
• Ensuring regulatory compliance: Compliance with AML laws and KYC regulations is essential for avoiding hefty fines and legal repercussions. 
• Protecting reputation: Failing to screen customers properly can lead to associations with bad actors, damaging a company’s credibility and stakeholder trust. 
• Improving operational efficiency: A seamless, automated screening system ensures legitimate customers can onboard quickly while flagging high-risk individuals for further review. Finding the balance enhances the user experience while strengthening fraud prevention efforts.

Customer Screening Requirements

Customer screening is a critical requirement across various industries to ensure compliance with regulations. 

• iGaming: Screening helps prevent money laundering and fraud by identifying high-risk players. 
• Fintech: Companies must conduct thorough customer screening during onboarding and transactions to comply with AML laws, often using advanced technologies like AI for efficiency. 
• Payments: The industry relies heavily on screening to detect and prevent fraudulent transactions. 
• Insurance and real estate sectors:  Businesses use screening to mitigate risks associated with financial crimes.

How Is Customer Screening Conducted

Customer screening involves collecting and analyzing information to assess legitimacy and potential risks. This typically starts during the onboarding process, where new users’ registration data is submitted and cross-checked against various watchlists and databases.

At the heart of the process is comparing verified customer information with sanctions lists issued by financial authorities and government agencies. If a potential customer is flagged as a known money launderer or linked to other illegal activities, they’ll fail the AML screening. The more comprehensive the customer data and the more thorough the cross-checking against trusted databases, the more effective the screening process becomes.

Here’s a breakdown of the typical steps involved:

• Collecting data: Gathering customer information, including identity details, address, date of birth and other relevant data points.
• Watchlist screening: Cross-referencing the collected data against criminal watchlists to identify potential matches.
• Sanctions screening: Checking customer details against databases covering government sanctions to identify individuals or entities subject to penalties or restrictive measures.
• PEP screening: Identifying politically exposed persons (PEPs) and their close associates due to their higher risk of involvement in money laundering or corruption.
• Adverse media checks: Scanning media outlets for individuals or entities linked to criminal activity, corruption or other reputational risks.
• Continuous monitoring: Regularly updating and re-checking customer data against updated watchlists and databases to ensure ongoing compliance.
• Assessing risk: Evaluating the overall risk associated with a customer based on the screening results and other factors, such as transaction history and red flags indicative of fraud (IP address fro high-risk country, lack of social media profiles, etc.)

Challenges for Customer Monitoring in 2025

Businesses today face increasingly complex challenges as financial crimes grow more sophisticated. A key concern is ensuring customer data is accurate and complete — outdated or missing information can lead to flawed risk assessments and overlooked red flags.

At the same time, customer profiles are constantly evolving, requiring ongoing monitoring and re-screening to keep up with changes in financial behavior. With sanctions lists and regulations updating rapidly, screening systems must stay current to ensure compliance.

The sheer volume and complexity of transactions, combined with the need for real-time processing, put significant strain on existing systems, often leading to inefficiencies. Fraudsters are also becoming more adept at using intricate transaction patterns to slip through undetected.
Despite these challenges, advanced technologies like AI and machine learning can significantly improve screening processes, enhancing both efficiency and effectiveness in detecting financial crimes. As financial crime continues to rise, it is clear that robust customer screening solutions are essential for mitigating risks and ensuring regulatory compliance.

How Can SEON Help

SEON’s fraud detection and AML platform empowers compliance teams to enhance their customer screening efforts and maintain AML compliance more effectively. It simplifies the process by integrating a constantly updated portfolio of sanctions lists and other relevant watchlists. The platform automatically flags potential matches based on customer data (like names and addresses), making it easier for compliance officers to conduct swift manual reviews.

Going beyond basic data matching, SEON also leverages real-time digital footprint analysis and device intelligence. These features create a detailed profile of each flagged individual, helping compliance officers make informed decisions about whether a match is legitimate, thereby reducing false positives. With continuous monitoring and transaction screening capabilities, SEON provides a comprehensive solution for businesses looking to strengthen their defenses against financial crimes and stay on top of regulatory requirements.