A business that conducts financial activities always has risks such as money laundering, terrorist financing, corruption, and human trafficking. Therefore, Some international organizations such as FATF or government officials create AML / CTF laws. Businesses are obliged to comply with these laws. Organizations that do not comply with these laws may have to pay large fines.
Businesses need to be able to detect high-risk and suspicious activities automatically. Transaction monitoring solutions provide anti-money laundering and fight terrorist financing for your business. So why is it essential to have process monitoring software? How does transaction monitoring protect your business from money laundering activities? We have compiled what you need to know about transaction monitoring in this article.
The real-time and daily monitoring of the customer's financial institutions' activities are called transaction monitoring systems or solutions. Transaction monitoring solutions provide analyze a customer's historical information and entire account profile. Thus, financial institutions can get to know their customer and take measures against any money laundering risk by quickly determining the customer risk level.
Transaction monitoring software alerts when a situation violates the rules and is against the customer profile during the Customer transactions. Once the software generates an alarm, the transaction monitoring process conducted by AML is automatically stopped, and the cycle continues to be executed and reviewed by the Firm's Compliance or Risk Department. Suspicious transactions are reported to AML, CFT, and KYC regulators when a crime is detected in the customer's transaction. This report is known as the Suspicious Activity Report (SAR).
Some of the activities that are covered by the AML Monitoring process include:
- currency exchange
- transfer / eft transactions
- payment transactions
Why Is AML Transaction Monitoring Essential?
1) Expansion of Financial Transaction Circle
With the advances in technology, the field of financial transactions has expanded significantly. Electronic payment instruments have more interest than cash payments because they save time and allow the transaction to be implemented quickly. Likewise expanded the monitoring scope of AML systems. Additionally, more effort may be required to control electronic transactions. Therefore, having an AML compliance program is more critical than before.
2) Necessity to Comply with Changing Regulations
There is a global struggle against money laundering and terrorist financing. In line with this struggle, many laws and regulations were prepared for companies from past to present. Samely, new AML regulations continue to be published with the global challenge. Also, each country has specific AML / CTF regulations prepared by the government. For example, there are currently about nine act plans in the US Congress with AML content moving forward.
The constant change of regulations and the new policies implemented require businesses to update their compliance processes regularly. In this context, compliance teams play an essential role in determining the customer risk profile in light of new policies and procedures.
3) Detection of Financial Crimes
4) Access to Necessary Information
Firms need to know how to get the information they need. Therefore, the AML transaction tracking system should be clear and understandable for companies. At this point, companies can largely avoid their workload with an AML compliance team that is expert in creating the right analytics and can save time.
5) Avoiding Risks and Financial Sanctions
There is no doubt that companies' most damaging factor is that AML transactions are not properly monitored. Also, there are many money-laundering scandals against this provision. These countless money laundering scandals that companies have been subjected to cost them dearly. For example, in 2018, more than $ 2.9 billion in fines were imposed by global financial regulators for AML disputes. In 2019, this number doubled. Thus, Companies have become increasingly aware of the need to implement effective AML transaction monitoring.
Sanction Scanner: The Best Compliance for Your Business
Transaction Monitoring Solutions are one of the most effective methods to prevent money laundering. It enables businesses to act following AML, KYC, and CDD rules. Companies can set their own rules with transaction monitoring and report suspicious activities according to these rules. (SAR). Through AML Transaction Monitoring tools, you can eliminate money laundering risks in financial transactions. Here's what you need to know about Sanction Scanner AML Transaction Monitoring Software:
It is called false positive when transaction monitoring detects unsuspicious behavior and generates alarms as suspicious. For example, suppose you are a bank customer who has made multiple ATM withdrawals daily. In that case, AML transaction monitoring systems see your activity as suspicious activity, and the transaction monitoring sends urgent alarms to your affiliated financial institution. However, there may not be a suspicious situation. This situation is called a false positive alarm.
Sanction Scanner ensures that false-positive alarms are reduced by creating the most appropriate rules and scenarios for businesses. It can also be realized without the need for any coding knowledge. Through Sanction Scanner Transaction Monitoring Software, you can focus on the right alarms and reduce your workload.
Sanction Scanner Transaction Monitoring has a real-time alarm system. Thus, it allows you to instantly see the processes' alarm levels determined according to the scenario and rules suitable for your business. Shortly, Sanction Scanner real-time alarm system provides intervention in suspicious activities as quickly as possible.
Compliance to Sector
Another possibility provided by Sanction Scanner AML Transaction Monitoring is that compliance solutions can change according to the sector. The finance sector has an independent and dynamic structure. It requires adaptation solutions that can be changed and improved. For example, you may have entered the industry as a small business and have grown over time. Your company's requirements will also vary accordingly. Sanction Scanner AML solutions comply with the needs of your business. So you can continue to improve without taking any risks.
Companies should conduct regular risk assessments against money laundering and terrorist financing risks. In addition to this, Sanction Scanner risk-based scorecards provide to make advanced risk assessments based on country, currency, and customer segment criteria. Thus, you can protect your company from money laundering activities.