What is AML transaction monitoring?
Monetary transaction check as an effective regulatory instrument.

Transaction monitoring software helps financial institutions such as commercial banks, finance companies, and credit unions to monitor their clients' money transactions such as cash deposits, withdrawals, and wire transfers 24 hours on a daily basis.

By spotting patterns and outliers AML transaction monitoring provides wholesome reports on customers' profiles and the level of risk they pose if there is any. Having looked at the profile such software gains enough information to predict the client's future activity and gives out alerts if notice anything worrying.
What is it?
Transaction monitoring is an AML and fraud prevention security process that reviews and analyzes suspicious financial transfers or commercial transactions in digital and fiat currencies, exposing the origins of money obtained illegally.

Companies are using transaction monitoring to prevent financial fraud, terrorism financing, evasion of international sanctions, and all types of money laundering such as structuring, round-tripping and double-invoicing.

Monitoring client's profiles and their transactions is a vital part of the AML policy of any company.

AML monitors transactions such as:

  • deposits;
  • transfers between accounts;
  • withdrawals;
  • exchanges of currency;
  • extensions of credit;
  • any monetary instrument or investment security;
  • any other payment, transfer, or delivery by, through, or to a bank.
What happens?
  • Monitoring of cash deposits, withdrawals, wire transfers, ACH network activities, etc. that exceed statistical thresholds;
  • Customer profiling with a complete assessment of their money transaction history;
  • Blacklist screenings;
  • Sanctions screening;
  • High-risk transaction regulation and exposure.
A bigger picture
Usually, financial institutions employ a combined risk prevention solution to customer accounts. This is how the whole process of AML check goes:

  • Upon registering, the client's profile enters the bank's KYC/CIP database where it is scanned for red flags and PEP.
  • When the system gathers all the necessary information on a customer, it opens the account.
  • Anti money laundering transaction monitoring solution routinely checks account activity and compares it to the risk patterns in search of abnormalities.
Risk-based approach
The EU's AML directive calls for consistent risk prevention measures and encourages companies to gain sufficient knowledge of their clients. Here is where the risk-based approach comes to mind.

The approach implies intensified risk management and prevention of higher-risk scenarios such as money laundering or terrorist financing. The level of expected risk and the extent to which AML/CFT procedures go strongly depend on a number of factors commonly defined by The FATF. It depends on a financial institution's business complexity, operational and geographical diversity, type of customers, product, distribution channels, size of the transactions, etc.
The benefits that come with transaction monitoring
  • There will not be any false alerts. Having analyzed the user's profile it is able to understand a fine line between normal and abnormal for a specific case.

  • Scans for suspicious behavior are happening both, in real-time and retrospectively. The system looks into your historic transaction data and other contextual profile or behavior data.

  • Partners and regulatory authority are left reassured of your robust investigatory and risk prevention solution.

  • Software makes it easy to understand the cause and investigate the fraudulent activity by linking entity, retrospective, and peer analysis.

Transaction monitoring system is an essential AML feature and something that all newly-established companies and big corporations need to adopt for their customer safety and own security.

At Sumsub we monitor transactions and execute other checks as a part of our AML screening service.
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