An introduction to AML Transaction Monitoring

One of the biggest challenges facing financial institutions today is finding improved methods of managing the vast amounts of transactional data being collected daily. Identifying and protecting an institution from any transactions that may lead to money laundering or terrorist financing has now become one of the most urgent and important factors in any holistic compliance program.

 

Anti-money laundering (AML) transaction monitoring software allows banks and other financial institutions to monitor customer transactions on a daily basis or in real time for risk. By combining this information with analysis of customers’ historical information and account profile, the software can provide financial institutions with a “whole picture” analysis of a customer’s profile, risk levels, and predicted future activity, and can also generate alerts to suspicious activity.

In this article, the team at Computime Software takes a closer look at how AML transaction monitoring software can safeguard companies from suspicious activity and preserve their reputation.

When is AML transaction monitoring needed?

The opening of a bank account or financial investment, depositing, withdrawing, or transferring funds form the majority of transactions that need to be monitored, as opposed to one-time transactions. This means that until the account is closed, as well as throughout the duration of the relationship, ongoing transaction monitoring is needed.

What exactly is monitored, and why?

At the start of the relationship with the client, knowledge in the form of data and documents is obtained to be later updated at different times throughout the relationship in question. Common factors that monitoring takes into account can include changes in company structures and identifying expiring documents. Monitoring also looks at the value and frequency of transactions being made by an individual and any related individuals or entities. High-risk dealings and political exposure can also increase a customer’s risk profile, as well as changes in physical location. 

Sanction screening is likewise becoming more important, especially with the rise of terrorist financing and the definition of PEPs (Politically Exposed Persons) being broadened. The latter can now even involve high-ranking officials in the armed forces and their extended family members. Therefore, the scanning of existing clients, along with that of potential customers during on-boarding, has become an intensive yet vital operation for many institutions.

Why has transaction monitoring become mandatory for leading regulators around the world?

Financial institutions in many countries must now strive to meet various requirements related to anti-money laundering (AML) and counter-terrorist financing (CFT). Implementing an AML transaction monitoring solution fulfils this purpose, along with other reporting obligations, among which is filing Suspicious Activity Reports (SARs).

How can AXON AML Transaction Monitoring protect institutions and their finances?

AXON monitors transactions relating to individuals, accounts, and entities to detect suspicious activity – quickly and effectively. It enables financial institutions to automatically identify and react to suspicious behaviours in real-time or retrospectively while minimising unnecessary alerts. This helps to avoid reputational risk and potential fines, while also improving customer experience and increasing retention. For more information on AXON AML Transaction Monitoring, contact Computime Software today.

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