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5 considerations for a Transaction Monitoring system

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Written by David Povey on Monday 11 April, 2022

Transaction monitoring is an area that is constantly in the spotlight. The challenge for a financial institution is to get the balance right of monitoring the accounts of those individuals who are up to no good, but without impacting on the transaction flow of those who are innocent. The infographic below will bring out 5 key considerations for anyone managing or working within transaction monitoring.

 

 

 

Title: 5 considerations for a Transaction Monitoring system. 1. A firm will have to identify and document the correct transaction monitoring approach for their business model and strategy. Culture, education and training are key in preventing financial crime. 2. Transaction monitoring systems should be clear and understandable for firms, particularly in times where the system is updated to include a rapidly changing transaction environment, such as the unprecedented sanctions changes we’re currently experiencing. 3. An effective transaction monitoring system may employ an automated approach but will still rely on a certain level of manual, human intervention, to review the potential issues identified. 4. Electronic financial transactions provide new ways of money laundering for criminals. AML compliance regulations and transaction monitoring play a key role in detecting increasingly complex financial criminal activity, and so must also be reviewed and updated regularly. 5. Traditionally, the focus of transaction monitoring systems has been on numbers – value/volume/frequency – however, other data, such as known high-risk money laundering addresses and corporations, should also be factored in. Numbers constantly change, but corporate names and addresses tend to remain static so are a more reliable search component.