What is Sanctions Screening?
Sanctions screening is the process of checking investors, counterparties, and other entities involved in fund operations against international sanctions lists. These lists — maintained by bodies including the EU, UN, OFAC (US), and HM Treasury (UK) — identify individuals, entities, and countries subject to financial restrictions.
Under AIFMD II, sanctions screening obligations have been strengthened. AIFMs must demonstrate that they perform ongoing screening of all fund participants and counterparties, maintain records of screening activities, and report any matches or near-matches to the relevant authorities. Some NCAs, like AMF, require sanctions screening evidence to be included directly in regulatory filings.
Effective sanctions screening requires access to up-to-date sanctions lists, fuzzy matching algorithms to catch name variations, and a documented screening workflow with clear escalation procedures for potential matches.
Why It Matters for Compliance
Sanctions violations carry severe penalties — including criminal liability for individuals. AIFMD II makes sanctions screening a reportable compliance activity, meaning your NCA can audit your screening practices as part of supervisory reviews. Inadequate screening isn't just a legal risk; it's a fund authorization risk.
How Caelith Helps
Caelith includes built-in sanctions screening against EU, UN, and OFAC lists with real-time updates. Our system generates the screening evidence that NCAs like AMF require in filings, and maintains a full audit trail of all screening activities.
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