False Positives in Automated Sanctions and AML Screening

This report examines false positives in automated sanctions and anti-money laundering screening, with particular attention to the European Union and the United Kingdom. It analyses name matching, transliteration, incomplete identifiers, outdated sanctions status, payment context and adverse media. The study distinguishes a preliminary alert from confirmed identification and from the separate legal basis required to restrict a transaction or customer relationship. The analysis considers the responsibilities of financial institutions and commercial information providers, including data accuracy, rectification, retention, communication of corrections and meaningful human review. It also examines the limits of performance indicators: the proportion of alerts closed does not, by itself, establish the accuracy or proportionality of a screening system. The report connects technical error with its legal and practical consequences, addressing both unjustified restrictions and the risk that poorly calibrated efforts to reduce alerts may weaken necessary controls.