Kyc Aml Screener

KYC / AML / Sanctions Screening Pipeline

You generate a complete screening pipeline for customer onboarding and continuous monitoring. The 2026 regulatory floor: customer identification (CIP), customer due diligence (CDD), enhanced due diligence (EDD) for high-risk, sanctions screening against multiple lists, PEP screening, and transaction monitoring. The dominant cost driver is false positives — sloppy matching buries compliance teams in noise and slows real-money revenue.

============================================================ === PRE-FLIGHT ===

Verify:

• Regulatory regime: US (BSA / FinCEN / OFAC), EU (AMLD6), UK (MLR 2017), Singapore (MAS), or multi-jurisdiction.
• Customer type: retail individuals, small business (KYB), institutions, fintech (regulated by OCC / Fed / state).
• Onboarding volume: < 100/day → in-house tooling viable. > 1k/day → must use specialist vendor (ComplyAdvantage, Dow Jones, LSEG World-Check, dilisense, Sayari, Sanctions.io).
• Risk appetite: tighter thresholds = fewer false negatives but more analyst review. Calibrate per regulator expectations.
• Existing stack: identity verification vendor (Persona, Plaid Identity, Veriff, Onfido, Jumio) feeds this pipeline; if absent, route there first.

Recovery:

• For sub-100/day startups, generate the in-house pipeline with OpenSanctions (free, comprehensive, daily updates) as primary data source.
• For higher volume, generate adapter scaffolds for ComplyAdvantage + Dow Jones APIs.

============================================================ === PHASE 1: LIST INGESTION + REFRESH ===

Source the watchlists. Frequency: nightly refresh for sanctions (lists update daily), weekly for PEP.

Generate list_refresh.py that pulls each list, normalizes to a common schema, and diffs against the previous version. Newly listed entities trigger an alert against your customer base.

VALIDATION: After refresh, list count is plausible (SDN ~16k entries in 2026). Diff produces both additions and removals.

============================================================ === PHASE 2: CANONICAL ENTITY SCHEMA ===

Normalize every list entry into:

{
  "list_id": "OFAC-SDN-12345",
  "source_list": "OFAC_SDN",
  "first_listed_date": "2024-03-15",
  "last_updated": "2026-02-08",
  "entity_type": "individual" | "vessel" | "aircraft" | "entity",
  "primary_name": "Smith, John",
  "alt_names": ["Johnny Smith", "Иван Смит", "...transliterations..."],
  "dob": ["1965-06-12"],
  "place_of_birth": "Damascus, Syria",
  "nationalities": ["SY", "LB"],
  "addresses": [...],
  "identifications": [{"type": "passport", "country": "SY", "number": "..."}],
  "linked_entities": [...],
  "programs": ["SDGT", "SYRIA"],
  "remarks": "..."
}

Same schema applies to PEP entries (with positions, parties, etc.) and adverse media (with article references).

VALIDATION: Schema validates with strict types. Cross-list dedup catches the same entity present on multiple lists.

============================================================ === PHASE 3: NAME MATCHING ENGINE ===

This is the highest-leverage component. Match quality = (recall) × (1 / false positives).

Layered approach:

1. Exact + alias (deterministic): full match against primary_name and any alt_name.
2. Phonetic (Soundex, Metaphone, BMPM): handles transliteration variants (Mohammed/Muhammad/Mohamed).
3. Edit distance (Damerau-Levenshtein): handles typos. Threshold: ≥ 0.85 similarity.
4. Token-based (Jaccard, Jaro-Winkler): handles word reorderings ("John Smith" vs "Smith, John"). JW threshold ≥ 0.92.
5. Substring + n-gram: catches partial matches in long entity names.
6. Cross-script: transliterate Cyrillic/Arabic/Greek/Chinese to Latin before comparing.

For each candidate match, compute a match score:

match_score = w_name * name_sim
            + w_dob * dob_match
            + w_country * country_match
            + w_id * id_match
            - w_disambig * disambiguation_signal

Default weights: name 0.5, dob 0.2, country 0.15, id 0.15. Tune per false-positive rate.

Filter cascade:

• Score < 0.6 → drop (likely noise).
• 0.6-0.79 → secondary review queue.
• 0.80-0.95 → analyst review.

• 0.95 → block + analyst review.

VALIDATION: Benchmark against the FuzzyWuzzy test corpus (sanction-name pairs with known matches/non-matches). Precision ≥ 95% and recall ≥ 90%.

============================================================ === PHASE 4: ONBOARDING SCREENING API ===

Generate screen.py exposing:

def screen_customer(customer: CustomerProfile) -> ScreeningResult:
    """
    Returns ScreeningResult with:
      - status: CLEAR | HOLD | ESCALATE | BLOCK
      - matches: list of MatchCandidate with scores + list_id refs
      - pep_matches, sanctions_matches, adverse_media_matches
      - risk_score: 0-100
      - explainer: human-readable reasoning
    """

Key behavior:

• Hard block on sanctions match > 0.95 (compliance failure to block = personal liability for the MLRO).
• Hold on PEP match — most jurisdictions require EDD before opening, not a hard block.
• Risk score combines screening hits + geography (high-risk country FATF lists) + transaction type + occupation.

Auditability: every screening decision persists who, when, what, why in tamper-evident storage (append-only, S3 Object Lock or equivalent).

VALIDATION: Round-trip an onboarding with a known-OFAC-listed test name; system blocks and records the decision.

============================================================ === PHASE 5: ONGOING MONITORING + WATCHLIST DIFF ===

After a customer is onboarded, screening doesn't stop. Generate:

1. Nightly rescreen of every active customer against the latest lists.
2. Watchlist diff alert: when a name is newly added that fuzzy-matches an existing customer, raise a HIGH priority case.
3. Address / occupation / nationality change triggers re-screen.
4. Transaction-trigger rescreen: any tx ≥ threshold (e.g., $10k cash, $3k wire) auto-screens counterparty.

Generate monitor_cron.py + alert dispatcher (Slack, PagerDuty, Jira).

VALIDATION: Test by adding a sanctioned name to the diff list and confirming alert fires for any pre-onboarded customer matching that name.

============================================================ === PHASE 6: CASE MANAGEMENT UI SCAFFOLD ===

Compliance analysts need to disposition cases. Generate a minimal UI (Next.js app router or Streamlit) with:

• Case queue (priority sorted)
• Customer profile + screening hits side-by-side
• Disposition: CLEAR (false positive), ESCALATE (to MLRO), FILE SAR (suspicious activity), BLOCK
• Required fields per disposition (justification, supporting docs)
• Two-eyes review for SAR / BLOCK actions
• Audit trail (who clicked what when)

VALIDATION: Audit trail captures every state change with user, timestamp, IP.

============================================================ === PHASE 7: SAR (FORM 111) HELPER ===

When a case escalates to SAR, generate a draft of FinCEN Form 111 (CTR is Form 112):

• Filing institution info (pre-filled from org config)
• Subject info (from customer record)
• Suspicious activity type codes (FinCEN list — terrorism financing, structuring, money laundering, etc.)
• Activity dates and dollar amounts
• Narrative (5W+H — who, what, when, where, why, how) with the screening evidence summarized

Compliance officer reviews + files via BSA E-Filing System. Skill does NOT auto-file — narrative drafting only.

VALIDATION: Narrative covers all 5W+H. Suspicious activity codes correctly selected from FinCEN's controlled vocabulary.

============================================================ === SELF-REVIEW ===

Score 1–5:

• Complete: All 7 phases delivered? Lists ingest? Matching tunable? UI scaffolded?
• Robust: Matching handles transliteration + aliases + typos? False positive rate measurable?
• Clean: Decisions auditable, append-only? Auto-block ONLY on confirmed sanctions match (not PEP)?
• Compliance-credible: Would an MLRO at a regulated fintech (bank, broker-dealer, crypto exchange) sign off?

Common gap: blocking PEPs by default instead of EDD-ing them. PEP ≠ sanctioned; flag for review, don't auto-block.

============================================================ === LEARNINGS CAPTURE ===

Append to ~/.claude/skills/kyc-aml-screener/LEARNINGS.md:

— <regime, volume, customer type>

• What worked:
• What was awkward:
• Suggested patch:
• Verdict: [Smooth / Minor friction / Major friction]

============================================================ === STRICT RULES ===

• Never auto-block on PEP match alone. PEPs are legal customers requiring EDD, not prohibited.
• Never silently drop a sanctions match. False negative = compliance violation = personal liability + bank-wide fines.
• Never store screening results without an audit trail. Regulators reconstruct the decision chain in exams.
• Never compute match score without dob/country disambiguation when available. Name alone produces too many false positives.
• Never deploy without nightly list refresh. Stale OFAC = the day after a designation lands you're exposed.
• Always document the matching threshold rationale. "Why 0.85?" comes up in every BSA exam.