Five things to think about when setting up a transaction monitoring system

Transaction monitoring is a topic that receives a lot of attention. A financial institution's challenge is to strike the right balance between monitoring the accounts of those who are up to no good and affecting the transaction flow of those who are not.

Here are five important things to keep in mind if you are in charge of transaction monitoring.

The correct transaction monitoring approach for a company's business model and strategy must be identified and documented. Financial crime can be prevented through culture, education, and training.

Firms should be able to understand and use transaction monitoring systems, especially when the system is updated to reflect a rapidly changing transaction environment, such as the unprecedented sanctions changes we are seeing now.

Although an effective transaction monitoring system will use an automated approach, it will still require some manual, human intervention to review any potential issues that are discovered.

Criminals can use electronic financial transactions to launder money in new ways. Anti-money laundering regulations and transaction monitoring are critical in detecting increasingly complex financial criminal activity, and they must be reviewed and updated on a regular basis.

Transaction monitoring systems have traditionally focused on numbers: values, volumes, and frequency. Other information, such as known high-risk money laundering addresses and companies, should be considered as well. Corporate names and addresses, on the other hand, tend to remain static and are a more reliable search component.