Why Sanctions Screening Testing Matters - And How to Get It Right
Insight No.05/26 May 2026
In today’s evolving regulatory landscape, financial institutions face increasing pressure to ensure that sanctions screening systems are not just operational, but effective. As sanctions screening is a core pillar of AML compliance, regulators such European Banking Authority (EBA) now expect institutions to continuously test, calibrate, and enhance these systems. The key question is no longer whether sanctions screening exists, but whether it works as intended.
In this insight, we introduce certain services that PwC offers to help financial institutions answer that question with confidence: Sanctions Effectiveness Testing and Sanctions Efficiency Analysis.
1. Effectiveness Testing: Can Your System Catch What It Should?
- Indicates the effectivity of the screening, i.e. how good the system is at identifying sanctions
- Validates the list-management process
- Supports the identification of the optimum level of fuzzy matching thresholds and false-positive reduction functionalities of the systems
Process of sanction effectiveness testing:
Define scope -> Create test files -> Run in screening -> Analyse & interpret results
2. Sanction Efficiency Analysis: Reducing the Cost of False Positives
A screening system’s true power lies in its precision - minimizing false positives with maximum accuracy. PwC's Efficiency Analysis consists of a series of exploratory data analyses, allowing for data-driven insights uncovering the root causes behind false-positive hits, therefore helping compliance teams act smarter and faster.
Benefits of Sanction Efficiency Analysis:
- Decrease in operational costs
- Prepared for Regulatory Inspection
