Nowadays, an effective compliance procedure is no longer an option but a necessity. Anti-money laundering regulations require financial institutions to prevent their customers from conducting illegal business activities, such as money-laundering and the financing of terrorism through their services. Our team at Computime Software has come up with the following steps of getting AML transaction monitoring right.
1. Create rules which reflect the type of customer and business activity
Using artificial intelligence, AML transaction monitoring software works by sifting through large amounts of data to identify what deviates from the norm as defined by the programmed rules. Indeed, poor rules and inadequate tuning of the software are the most common causes for false positives, with alerts being generated by anything from a cash deposit or withdrawal to foreign currency exchange.
The thresholds for transaction values that generate alerts may have initially been set too high or too low and in which case, would need adjusting. To help counter this, every transaction monitoring system needs parameters to determine what is “normal”. The rule of thumb is to avoid taking a “one size fits all” approach.
2. Test and tweak
If there are too few or too many alerts of possible suspicious activity based on the number of transactions, the risk profile of the customer, and the type of business activity involved – it’s a sign the transaction monitoring system may not be working as intended. Depending on the results of the testing stages, the financial institution may choose to make certain tweaks, such as adjusting the rules and the customer risk profiles. Checking the accuracy of a transaction monitoring system six months after the system is installed and each year thereafter will help prevent illegal activity from going undetected.
3. Monitoring of manpower
As crucial as the right technology is in weeding out illegal activity, no AML transaction monitoring system alone is ever enough. Hire compliance officers with previous investigative and forensic accounting training, along with knowledge of the business line, then train them to know what to look for and how to correctly handle generated alerts. It is also vital to have a solid controls process, which involves superiors analysing and verifying the results of AML alerts.
Effective AML Transaction Monitoring with AXON
Selecting the best AML solution plays a huge part in eliminating risks and protecting your business from being associated with illegal financial activity. AXON AML Transaction Monitoring is a robust, flexible, and easy-to-use system that monitors and alerts on suspicious transactions in real time. Contact us at Computime Software for more information on the features of our AML monitoring solution and how it can help you avoid reputational risk and potential fines.