How automated OFAC sanctions screening works, why ownership matters under the 50 Percent Rule, and what an alert review record needs to show.
OFAC screening automation compares the names on your customers, vendors, and payment counterparties against the sanctions lists the Office of Foreign Assets Control (OFAC) publishes. The best-known list is the Specially Designated Nationals and Blocked Persons List, usually called the SDN List. A screening tool does the matching. A person still has to decide what each match means, and the decision has to hold up later.
Fuzzy matching on transliterated names produces potential matches that turn out to be different people or companies. The queue grows with transaction volume, so the practical question for an automation project is how fast an analyst can clear a false match and document why, not whether names can be matched at all.
Automation is useful for the repetitive parts of that job. It can put legal name, country, date of birth, and registration number into one view, rank potential matches by how closely they fit, collect the public records a reviewer would otherwise search for by hand, and write each step to an audit log. It does not decide whether a match is real. The record should show which identifiers the reviewer compared and why they cleared or escalated the alert.
A name that is not on the SDN List can still be a blocked party. OFAC's 50 Percent Rule covers entities owned 50 percent or more, in the aggregate, by one or more blocked persons. OFAC's FAQ 399 gives an example: if two blocked persons each own 25 percent of an entity, the entity is blocked, because their stakes add up.
Control is a different test. FAQ 398 says an entity controlled by a blocked person, but not owned 50 percent or more, is not automatically blocked under the rule. OFAC may still designate such an entity under another criterion, and it urges caution when dealing with one.
That changes what alert review has to cover. An analyst who clears a counterparty on its name alone can miss a blocked owner. Review should pull ownership data where it exists and record which owners were checked. Under FAQ 402, property that was blocked while an entity was owned 50 percent or more by blocked persons stays blocked even if their combined stake later falls below 50 percent, unless OFAC authorizes dealings or removes the owners from the SDN List. A reviewer who sees a recent ownership change should escalate it, not close it.
A typical alert starts as a potential match with a score. The first question is whether the identifiers agree. A matching name with a different country, date of birth, or registration number is a weaker match than a matching name with the same identifiers. The reviewer records what they compared, what they found, and the source they used.
If the identifiers are inconclusive, the alert moves to a second check. This is often where ownership and related-party data matter, because the potential hit may be a subsidiary or a person connected to the counterparty rather than the counterparty itself.
An unresolved or confirmed match should not be closed by one analyst alone. Escalate it under the institution's own procedure: a second reviewer or compliance lead decides, and the onboarding step or payment stays paused until they do. The queue exists so that no alert is closed by someone who has not been trained to decide it.
Each decision needs a record: the list version checked, the identifiers compared, the source of any ownership data, the reviewer, the outcome, and the date. The beneficial ownership rule sets retention periods for the records it covers. Identifying information is kept for five years after the account closes, and verification records for five years after they are made (31 CFR 1010.230(i)(2)). Those periods apply to beneficial ownership records, not to OFAC screening logs as such. Keeping screening logs to a similar standard is sound practice, but confirm the retention period for those logs with counsel.
Sanctions screening is one control inside a wider anti-money laundering program. The AML automation guide covers the rest of that work, including alert scoring, evidence gathering, and case summaries. The Sanctions Screening glossary entry defines the terms reviewers use most often.
