Sanctions Screening

Sanctions screening is the process of checking a customer, counterparty, or wallet address against current government sanctions lists (OFAC's SDN list and its international equivalents) before or during a transaction, to avoid prohibited dealings and the legal liability that follows.

What it means

Effective screening in crypto has to go beyond a simple exact-match lookup against a published list, because a sanctioned individual's funds do not stop moving once a wallet is designated, they can, and often do, move onward to unlisted addresses controlled by the same person or their associates. Full screening therefore includes indirect exposure checks a few hops out from any known sanctioned address, beyond the direct match itself.

Sanctions lists also update continuously, and a wallet clean at the time of a transaction can be added to a list afterward. This is why sanctions screening is typically run repeatedly over time for held or recurring counterparties, not treated as a one-time check performed only at initial onboarding.

Real-world example

A payment processor running sanctions screening on every incoming deposit checks the sending address directly against the SDN list, and also assesses whether that address has recent transaction history with any already-listed wallet, catching exposure a direct-match check alone would miss.

Related terms

• OFAC SDN List
• Sanctioned Address
• Wallet Screening

In FreezeRadar

Sanctions screening (direct and indirect) is the core of every FreezeRadar scan, checked first and weighted as the most severe possible finding.

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