What is Transaction Monitoring?
AML transaction monitoring is the process that helps financial institutions detect and prevent money laundering and other types of financial crime. Information that’s gathered during transaction monitoring is mostly used to meet obligations under AML and CFT laws, for filing suspicious activity reports (SARs), and to inform decision-making.
Transaction monitoring is important because compliance with financial regulations is non-negotiable. Firms can face significant fines for not detecting and reporting any transactions tied to illegal activity.
Transaction monitoring activity is becoming more common and more visible to end-users. Unusual or high-value purchases may require approval via mobile banking or request a one-time password sent to a customer’s phone or email address.
Although transaction monitoring methods will vary between different firms and tools, they all work to do the same thing — to identify suspicious activity, assess risk levels, and make predictions about the future.