Sunday, January 17, 2021

What is AML Transaction Monitoring


Transaction Monitoring defines the essence of having the right processes, procedures, systems, and governance to monitor customer transactions.

To enable effective transaction monitoring, customer historical information and interactions provide the basis for building customer transactional profile.

Transaction monitoring is a complex activity, that requires sophisticated systems, technologies, and connectivity to different banking channels.

The volume of transactions going through financial institutions makes it challenging to use manual intervention in every transaction completed by customers.

According to PWC’s Global Economic Crime and Fraud Survey 2018, fraud is at an all-time high.  The survey finds that 49% of global organizations have experienced economic crime in the past two years.

Cybercrime and Fraud committed by consumers account for 31% and 29% respectively of the most commonly reported economic crime.

Most organizations rely on transaction monitoring systems as a key component of risk governance and management.  A company’s tolerance for risk can be seen in the way its transaction monitoring is set-up.

Related: AML Software: Anti-money laundering software global market report

The risk measures are reflected in rules and scenarios for identifying customer activities in violation of business customer segmentation for investigation.

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The challenge facing transaction monitoring is with the accuracy of customer data and the complexity of monitoring new transaction channels such as e-commerce, online banking, mobile banking and different financial products.

Minimising losses from inadequate transaction monitoring governance is a big headache for most senior management. Also, governmental regulations for anti-money laundering are getting stronger and increased scrutiny from regulators.

The regulations are becoming expansive, capturing new treat of financial crime such as terrorist financing.

The fight against financial crime is an on-going battle, with solution providers such as BAE, NICE, SaS constantly reviewing their products to meet the demand for more sophisticated and intelligent transaction monitoring system.

Over the next few years, artificial intelligence would be the next big ticket for solution providers and financial institution in effectively monitoring customer’s transactions.


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