Transaction Monitoring in Anti-Money-Laundering
As the volume of transactions continues to increase and money laundering techniques become ever more sophisticated. The financial institutions face fundamental challenges on anti-money laundering (AML) in transaction monitoring, making this an increasingly expensive task.
What is Transaction Monitoring?
In simple words, Transaction monitoring is an Anti-Money Laundering and fraud prevention security process that reviews and analyzes suspicious financial transfers or commercial transactions in digital and fiat currencies, ultimately exposing the origins.
Why Transaction Monitoring?
Companies and Financial Institution are using transaction monitoring to prevent terrorism financing, financial fraud, evasion of taxes, and other types of money laundering.
A vital part of any bank or Financial institution is to Monitor the client’s profiles and their transactions.
The AML monitoring Transactions are
2. Transfers between accounts
4. Exchanges of currency
5. Extensions of credit
6. Any monetary instrument or investment security;
7. Any other payment or transfer, etc.
Money-Laundering Alerts in Monitoring Transactions
1. Monitoring of cash deposits,
2. Withdrawals, wire transfers that exceed statistical thresholds
3. Complete assessment of money transaction history of the Customer
4. Blacklist screenings
5. Sanctions screening
6. High-risk transaction regulation and exposure.
The 5 Real-time Indicators of Transaction Monitoring in AML
1.Suspicious Activity Report
This is the final result of an investigation, and broadly indicates the meeting of overall Transaction monitoring system objective related to the suspicious activity. There is a need to make sure the Case categorization along with other details is represented to provide to the investigation.
2.Quantum of False Positives
a well-performing transaction monitoring system makes sure that the number of false positives is greatly reduced which accounts for about 87%.
3.Changes in Regulations
Understanding changes will drive investigative activities. current transaction monitoring systems are oblivious to the current regulatory changes which need to missing of suspicious transactions. a robust transaction monitoring will have the changes in the regulations incorporated so that suspicious transactions are tracked in real-time
4.Different Monitoring scenarios
Lack of proper customer and account segmentation, new products will need to more scenarios to be created. Transaction monitoring systems have to be well aware of the above to make a difference in the operations.
Cost related to the Operations teams used to complete investigations and systems tasks needs to be taken into account along with the system infrastructure to support the transaction monitoring system.
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