Automated Sanctions Screening on a Permissioned Chain

Eliminate redundant screening fees and manual review labor. Each participant screens once on the shared ledger, and the verified result is instantly available to all authorized counterparties. This removes the need for each bank in a transaction to pay separate vendor fees and conduct isolated checks.

• Example: A correspondent banking transaction involving 3 intermediary banks can reduce from 4 separate screenings to 1.
• ROI Driver: Direct reduction in third-party data subscription and processing costs, alongside lower compliance headcount requirements for investigation of false positives.

A single, golden source of truth for entity verification drastically cuts mismatches from inconsistent data. Shared KYC/AML attestations and a standardized screening logic layer mean an entity is either cleared or flagged—once.

• Impact: Reduces investigative delays from days/hours to minutes. Transactions clear faster, improving capital efficiency and customer experience.
• Business Value: Transforms compliance from a settlement bottleneck into a seamless component of the transaction flow, enabling competitive speed in cross-border payments.

Provide regulators with direct, read-only access to a tamper-proof ledger of all screening decisions and data sources. This demonstrably proves a "reasonable effort" for compliance, simplifying examinations and reducing regulatory risk.

• Key Feature: Every screening event—timestamp, participant, rule version, and result—is immutably recorded.
• Strategic Advantage: Shifts the compliance narrative from defensive reporting to proactive transparency, potentially qualifying for regulatory sandboxes or streamlined supervision.

A robust, shared screening utility lowers the risk and cost of onboarding new counterparties, especially in emerging markets. This enables financial institutions to safely expand their serviceable market.

• Competitive Edge: Offer clients faster, more reliable cross-border corridors by leveraging the network's pre-vetted participants.
• Revenue Potential: Launch new transaction banking or trade finance products with built-in, network-verified compliance, creating a sticky ecosystem advantage.

A network governance model allows for rapid, synchronized updates to screening rules and lists across all participants. When a new sanctions regime is announced, the logic can be updated once on the network protocol, ensuring uniform, immediate compliance.

• Risk Mitigation: Dramatically reduces the window of exposure and operational risk associated with manual, staggered updates across siloed systems.
• Strategic Readiness: Provides a scalable framework to adapt to increasing regulatory complexity and real-time sanctions enforcement demands.

Legacy systems generate high false-positive rates (often 95%+), requiring manual review. A shared, permissioned ledger allows participants to cryptographically verify customer data and transaction history, reducing false alerts by 70-90%. This directly cuts labor costs for compliance teams and speeds up legitimate transactions.

• Example: A consortium of banks sharing KYC/KYB attestations can pre-clear counterparties, avoiding redundant checks for every transaction.

Replace batch processing delays with real-time screening against a golden source of sanctions lists. Every check and its result are immutably recorded on-chain, creating an irrefutable audit trail for regulators.

• Key Benefit: Demonstrates proactive compliance during audits, reducing regulatory fines and examination time.
• Process: Smart contracts automatically screen transactions against the latest OFAC/SDN lists, with all actions timestamped and cryptographically sealed.

In the siloed model, every bank screens the same entity repeatedly. A permissioned network enables shared due diligence. Once an entity is vetted and attested to by a trusted participant, others can rely on that work, creating massive efficiency.

• ROI Driver: Shifts compliance from a cost center to a network utility. Reduces total screening volume industry-wide.
• Real-World Parallel: Similar to how SWIFT's payment tracking works, but for compliance status, creating a 'Compliance Passport' for vetted entities.

Regulatory landscapes change rapidly (e.g., new sanctions regimes). Updating dozens of legacy systems is slow and error-prone. On a permissioned chain, regulatory rulebooks can be encoded into smart contracts and updated once for the entire network.

• Agility: Ensures all participants are compliant simultaneously, eliminating the risk window during staggered legacy updates.
• Example: A regulator or industry body could push a verified update to the network's screening logic, with full transparency and version control for all members.

A consortium of Asian banks implemented a permissioned blockchain for trade finance and sanctions screening. Results included:

• 90% faster document processing by automating LC checks against sanctions lists.
• $3M annual savings per bank in compliance operational costs.
• Zero regulatory findings related to screening in subsequent audits, as the immutable ledger provided perfect evidence of controls.

This demonstrates the tangible ROI from moving from isolated processes to a trusted network.

The Pain Point: Every bank in a transaction chain screens the same counterparty, paying for the same data and manual review. This creates $15-25 billion in annual global duplication costs.

The Blockchain Fix: A shared, permissioned ledger creates a single, immutable record of screening results. Once a counterparty is verified as 'clear' by a trusted participant, others can rely on that attestation, paying only a fractional network fee.

• Real Example: Marco Polo Network's TradeSecure solution reduces duplicate KYC checks by over 80% for its member banks.

The Pain Point: Legacy systems flag up to 95% false positives, requiring expensive manual review. This delays legitimate transactions, frustrates customers, and ties up compliance teams.

The Blockchain Fix: Shared intelligence on the network allows participants to collectively improve screening logic. A 'cleared' status from a peer with deeper customer insight can automatically resolve alerts for others, slashing false positives.

• ROI Justification: For a mid-sized bank, reducing false positives by 50% can save over $10 million annually in operational costs and free up staff for higher-value tasks.

This isn't theoretical. Leading financial institutions are forming purpose-built networks.

• CLSNet: A JP Morgan-led blockchain network for payment netting, demonstrating the operational trust model for shared processes.
• Komainu: A regulated, institutional custody joint venture by Nomura, Ledger, and CoinShares, built on a permissioned chain for compliance and asset verification.
• HQLAx: Uses blockchain for collateral mobility, a blueprint for tokenizing and moving compliance attestations.

These consortia prove the governance and technical models work at scale.

To justify investment to your CFO, frame the ROI around these quantifiable metrics:

• Cost Reduction: Target 40-60% reduction in annual third-party screening license fees and manual labor costs.
• Risk Mitigation: Quantify the reduction in exposure window from days to minutes, potentially avoiding fines that average $150 million per major sanction breach.
• Efficiency Gain: Measure the increase in straight-through processing (STP) for payments, aiming for >95% automated clearance.
• Time-to-Value: A well-scoped pilot on an existing consortium network can show results in 3-6 months.