The Need for Ongoing Monitoring for the Finance Sector

Searching the client once is not enough; Banks and financial institutions need to have software to keep track of them regularly. The Ongoing Monitoring role may periodically check on a client based on their risk levels established as part of their risk profile.

 
What is Ongoing Monitoring?

Ongoing Monitoring is a process that you should develop and use to review all the information you have about the customers you have business relationships with.


High-risk clients should be checked periodically for criminal threats. On the other hand, High-risk clients should be checked periodically for criminal threats. Ongoing Monitoring is applied in order to periodically check the high-risk customers in the sanctions and PEP lists. With the Ongoing Monitoring Process, businesses can protect themselves against risks such as non-compliance and loss of reputation. Depending on the risk reduction plan, other reasons to consider include:


  • Increases inefficiency
  • Out-of-town or suspicious cross-border behavior
  • Inclusion of individuals in sanctions lists
  • Talking about negative media

If customers' account activity is considered to be irregular, Banks and financial institutions should prepare Suspicious Activity Reports (SARs) and submit these reports to the institutions they are responsible for.


Why is Ongoing Monitoring Needed?

The most important motivation in Ongoing Monitoring processes is the change of customer profiles. While in the process with a client, the client's risk may change; a client may be low risk, high risk, or vice versa. Examples of changing risks include:


  • Changing the risk profile of the customer, for example, switching to the PEP category, etc.
  • Changing the situation and risks of high-risk or sanctioned countries
  • Change in your organization's risk appetite
  • Change in your business relationships


In this case, the customer's risk may change; a customer may be low risk, very risky, or vice versa. For these reasons, Ongoing Monitoring is required, and organizations need it to monitor changes in the client risk profile and to review risk assessments.


Ongoing Monitoring Benefits

Ongoing Monitoring is applied to check high-risk customers on Sanctions and PEP lists periodically. Ongoing Monitoring protects businesses from risks such as non-compliance and reputational damage. In addition;


  • You can check thousands of national and global databases for updates on information about your customer and the countries in which you operate.
  • With Ongoing Monitoring, you can periodically be notified of any negative media or watchlist additions about your risk.
  • In high-risk markets, avoid increased business risks, and you can avoid the resulting financial losses.
  • You can check thousands of national and global databases for updates on information about your customer and the countries in which you operate.
  • Ongoing Monitoring can also add flexibility to your compliance program due to periodic updates, and you can also make compliance more effective.

 

When Is Ongoing Monitoring Required?

Since you have entered into a business relationship with a customer, you should Ongoing Monitoring this business relationship based on your risk assessment.


The frequency of performing ongoing Monitoring will depend on the level of risk assigned to customers in your risk assessment. Customers you have identified as low risk according to your risk appetite may require less frequent ongoing Monitoring, but you should take more precautions for customers you have identified as high risk. Regulators expect policies and procedures to include the frequency with which customers will be monitored on an ongoing basis, based on the institutions' risk assessment for the client or client group.


Enhanced Ongoing Monitoring

You should take enhanced precautions and perform enhanced ongoing Monitoring for a client you identify as high risk in your risk assessment. This means that you have to take extra precautions in addition to what is necessary, in accordance with the customer risk level. You can consider the following methods to ensure better Monitoring of your high-risk customers on an ongoing basis:


  • development of reports and more frequent review of these reports on high-risk transactions;
  • reviewing transactions according to an approved schedule with management's signature;
  • mark certain activities or those that deviate from your expectations and raise concerns as needed;
  • setting business limits or parameters that will trigger early warning signals on accounts or transactions and require mandatory review.



What Are the Records Retained for Ongoing Monitoring Process?

For Ongoing Monitoring, records of the measures taken by the companies and the information obtained from the ongoing Monitoring of the customers with whom they have business relations should be kept. These Records generally include;


  • processes implemented to perform enhanced ongoing Monitoring of high-risk clients;
  • Processes for recording information obtained as a result of your ongoing Monitoring;
  • processes for recording information obtained as a result of enhanced ongoing Monitoring for high-risk customers
  • information obtained as a result of high-risk customers.


Apart from these, policies and procedures that may form part of Ongoing monitoring records should be summarized and measures used to monitor business relationships continuously. However, information obtained as a result of your ongoing Monitoring is likely to be specific to a particular business relationship and not included in your policies and procedures, so it should be documented separately.


Information obtained from your ongoing monitoring activities can be documented and updated through various records. For example, updates to a customer ID, entitlement, or business relationship information can be saved to any file held with a customer. In addition, it is required by the regulators to keep a record of the measures taken and the information obtained from this ongoing Monitoring for at least five years from the date of creation of the record.


Sanction Scanner Ongoing Monitoring Tool

With the Sanction Scanner Ongoing Monitoring tool, businesses can plan the control period according to their risk profiles and then automatically perform all customer tracking checks. 


In addition, businesses with high customer volume do not have to spend much time on customer monitoring processes. With the powerful API, you can integrate the Sanction Scanner with your own company in minutes and automate all your AML control processes.


If you want to explore the Sanction Scanner Ongoing Monitoring tool, you can schedule a demo.

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