What is Ongoing Monitoring?

Know Your Customer (KYC) procedures and Anti-Money Laundering (AML) compliance are essential components of contemporary financial integrity. However, confirming a customer's identity during onboarding is only one aspect of maintaining AML compliance. To spot changes in risk over time, careful, ongoing monitoring is necessary. 

This significance is highlighted by a startling statistic: Inadequate monitoring procedures caused 58% of companies fined for regulatory violations in 2024 to fail. This emphasises how important it is to implement strong, ongoing monitoring systems in order to abide by rules and protect your organisation.

What is Ongoing Monitoring?

Following the KYC onboarding procedure, ongoing monitoring is the ongoing assessment of a customer's risk profile. Ongoing monitoring dynamically detects changes, even in real time, to flag possible risks, in contrast to periodic KYC updates, which take place at predetermined intervals.

How Does Ongoing Monitoring Operate? 

Usually, the procedure entails keeping an eye on particular indicators that might point to a shift in a client's risk profile. Changes in a customer's address, job status, or other personal information that might point to a possible change in circumstances are examples of these triggers. Additionally, since they may indicate suspicious activity or shifts in financial behaviour, large or unusual financial transactions are closely monitored. 

The presence of a customer's name on updated sanction lists, which may reveal connections to high-risk or restricted entities, is another crucial trigger. In order to determine the possible impact on the customer's risk level and guarantee regulatory compliance, any of these occurrences necessitate a more thorough review and additional due diligence. 

What Are the Requirements for Ongoing Monitoring?

Regulatory bodies such as the Financial Action Task Force (FATF), the European Union Anti-Money Laundering Directive (EU AMLD), the Financial Crimes Enforcement Network (FinCEN), and the Financial Conduct Authority (FCA) issue compliance mandates pertaining to ongoing monitoring. These regulations emphasise how crucial it is to conduct ongoing monitoring, particularly for high-risk clients, in order to identify and stop financial crime-related activities like fraud, money laundering, and terrorist financing. Organisations can guarantee a proactive approach to compliance and lower risk exposure by consistently monitoring customer transactions and behaviours. 

Examples of Industries Under Regulation 

Banks: Sustaining the integrity of the financial system requires ongoing monitoring, which is why banks are under regulation. Banks are required to monitor transactions, spot suspicious activity, and adhere to international AML and counter-terrorism financing (CTF) laws. 

Crypto Exchanges: Cryptocurrency platforms are one of the riskiest industries. So, they are subject to heightened scrutiny. To spot illegal activities like money laundering with cryptocurrencies or unregulated transactions, more surveillance is needed.

Payment processors: These businesses, which handle millions of transactions, need to concentrate on identifying fraudulent activity, unauthorised payments, or transactions coming from high-risk jurisdictions. 

There are often serious repercussions for not meeting these compliance standards. Some examples are heavy fines, licence suspensions, harm to one's reputation, a decline in customer confidence, and even criminal liability for executives. Following these guidelines are required by law for companies in regulated sectors. But also, it is essential for preserving operational integrity and long-term growth.

Key Triggers for Ongoing Monitoring 

Event-based triggers are specific occurrences or modifications to a customer's profile that can initiate ongoing monitoring. Among the examples are:

Personal Data Changes: Modifications to their employment or address may signal a shift in their risk profile. 

Large or Suspicious Transactions: Frequent or high-value transactions associated with nations that pose a high risk. 

Adverse Media Coverage: Public personalities or businesses that are the subject of negative media coverage (such as fraud or corruption). 

Modifications to Sanctions or PEP Lists: Individuals or entities that have been flagged need to have their risk immediately reevaluated. 

Businesses can continue to be proactive in managing compliance obligations by remaining watchful and identifying these triggers. 

Comparing Transaction Monitoring with Ongoing Monitoring 

Transaction monitoring looks for suspicious patterns in particular financial activities, while ongoing monitoring concentrates on the dynamic factors influencing customer profiles.

The two systems work well together. By addressing risks at the transactional and customer levels, they work together to create a strong framework for AML compliance. 

What's The Process of The Ongoing Monitoring?

• At onboarding, group clients according to their level of risk. 
• Adjust the monitoring frequency appropriately (for example, reviewing high-risk clients more frequently). 
• Segmentation should be in line with regulatory guidelines and internal risk appetite.

Establish Monitoring Rules and Triggers

• Specify the main things that trigger a review, such as odd transactions, shifts in beneficial ownership, relocations, or unfavourable press reports. 
• Make use of dynamic rule sets that change as regulations and new threats arise. 

Incorporate Outside Data Sources 

• Establish connections with databases of beneficial ownership, negative media feeds, and international PEP/sanction lists. 
• To capture changing risk, make sure these sources are updated frequently. 

Implement Real-Time Alerts and Automation 

• To identify anomalies in data or high-risk behaviour, use AML software. 
• Establish severity thresholds and escalation pathways for tiered alert systems. 
• Use behavior-based rules and fuzzy matching to cut down on false positives. 

Examine and Research Alerts 

• Assign compliance officers to investigate alerts. 
• Verify data against prior exchanges and customer documentation. 
• If required, reclassify and update the customer's risk profile.

Keep Audit Trails and Record Actions 

• Keep track of each review, choice, and escalation. 
• Safely store logs for regulatory reviews and audits. 

Improve the Program for Monitoring Constantly 

• Examine alert quality and system performance. 
• Modify rules, thresholds, or frequency in response to compliance teams' input and changing threats. 
• Take into account comments from internal reviews or regulatory audits. 

When Is Ongoing Monitoring Required? 

In a variety of situations, ongoing monitoring is necessary to guarantee compliance and successfully reduce risks. Because changing regulatory requirements necessitate constant vigilance, it is especially important for industries handling sensitive financial transactions or managing customer data. Changes in customer behaviour, such as odd transaction patterns, modifications to their risk profile, or the onboarding of new payment methods, make this process crucial. 

Furthermore, companies that operate in high-risk industries or areas with heightened exposure to sanctions, PEPs (Politically Exposed Persons), or negative media must place a high priority on ongoing monitoring in order to recognise and address possible threats as soon as they arise. Businesses can secure their operations, preserve regulatory compliance, and protect their reputation in a risk environment that is becoming more and more dynamic by putting in place a strong framework for ongoing monitoring.

Ensuring the Best Quality for Ongoing Monitoring

Ensuring the best quality for ongoing monitoring is crucial for organizations to effectively detect and prevent financial crimes, and to comply with AML and CTF regulations. There are several ways organizations can ensure the best quality for ongoing monitoring, including:

• Using specialized software tools: One of the most effective ways to ensure the best quality for ongoing monitoring is to use specialized software tools that automate and streamline the process. These tools can help organizations identify and assess risks, monitor suspicious activity, and generate reports for compliance and regulatory purposes. An example of such a tool is which can help organizations to detect whether their clients or their transactions are related to money laundering, terrorist financing, or other financial crimes. 
• Regularly reviewing and updating procedures and policies: Organizations should review and update their procedures and policies on an ongoing basis to ensure that they are up-to-date with the latest AML and CFT regulations and best practices. This includes regularly reviewing and updating customer due diligence procedures, transaction monitoring policies, and suspicious activity reporting procedures. 
• Employee training: Employee training is also crucial to ensure the best quality for ongoing monitoring. Organizations should provide regular training to employees to ensure they understand their roles and responsibilities, as well as the latest AML and CFT regulations and best practices. This will help ensure that employees can effectively detect and prevent financial crimes and comply with regulatory requirements. 
• Conducting internal and external audits: Regular internal and external audits are also important to ensure the best quality for ongoing monitoring. These audits can help organizations identify and address any areas for improvement in their compliance program, and ensure that they comply with AML and CFT regulations. 
• Using advanced technology: Organizations should also consider using advanced technology to help with ongoing monitoring. This includes using artificial intelligence, machine learning, and other technologies that can help organizations to identify suspicious activity more quickly and accurately.

What Are the Benefits of Strong Ongoing Monitoring?

Beyond compliance, effective monitoring procedures have other benefits. Important advantages include: 

• Reduction of Risk: By putting early detection procedures in place, you can protect your company and your clients from financial crimes like fraud and money laundering. 
• Customer Behaviour Insights: Businesses can better understand client needs, customise offerings, and forge stronger customer relationships by gaining a deeper understanding of customer behaviour.
• Regulatory Transparency: Creating transparent and well-documented procedures shows proactive adherence to rules, which facilitates meeting auditor requirements and avoiding fines. 
• Operational Efficiency: Teams can concentrate on key business operations that spur expansion and innovation by automating and optimising procedures, which also frees up important time and resources. 

Technologies and Instruments for Ongoing Monitoring 

Businesses can monitor more efficiently and with less manual labour thanks to advanced technologies. Among the essential tools are: 

• API-Based Screening Systems, which seamlessly integrate real-time data feeds with KYC profiles. 
• Machine Learning for Behavioural Analysis: Spot odd or questionable changes in consumer behaviour. 
• Real-time Sanctions Monitoring: Identify new limitations or prohibitions automatically. 
• Integrated Compliance Solutions: Sanction Scanner and similar platforms centralise automation workflows and data inputs.

By using these tools, inefficiencies are reduced and regulatory requirements are met. 

What Difficulties Exist in Ongoing Monitoring? 

Despite its advantages, organisations still have to deal with a number of issues, such as: 

False Positives: Compliance teams may become overloaded with alerts, wasting time and money sorting through pointless notifications. This can also take attention away from real dangers that need to be addressed right away. 

Legacy System Integration: Older IT infrastructures frequently lack the adaptability needed to integrate contemporary compliance tools seamlessly, which leads to technical difficulties and raises the cost of updates or workarounds. 

Data Accessibility: Obtaining the high-quality external data required for efficient compliance is often a challenge for smaller businesses. This problem may be made worse by tight budgets or a lack of established data-sharing agreements.

Changing Regulatory Standards: Companies find it challenging to stay up to date and make sure they fulfil all of their responsibilities without omissions or mistakes because compliance requirements are ever-changing and can differ greatly by region or regulatory body. 

Strategic technology adoption and ongoing team training are necessary for organisations to close these gaps. 

Examples of Ongoing Monitoring in Practice

Ongoing monitoring is important for organizations in various industries, including finance, insurance, healthcare, and other sectors. In practice, this can involve a variety of different activities, including:

• Monitoring for the appearance of clients or their associates in the news or on sanctions lists: Organizations can use specialized software tools to monitor the appearance of their clients or their associates in the news or on sanctions lists, such as the Office of Foreign Assets Control (OFAC) list. This can help organizations identify any potential risks associated with their clients or their transactions. 
• Analysis of transaction data: Ongoing monitoring also includes the analysis of transaction data for unusual or suspicious patterns. For example, organizations can use software tools to monitor suspicious transactions, such as large cash deposits or wire transfers, or transactions that do not align with the normal activities of a client. 
• Regular reviews of client information: Organizations also conduct regular reviews of client information to ensure that it is accurate and up-to-date. This can include conducting regular reviews of client files to ensure that the information is complete and accurate, and taking steps to update or correct any information that is found to be outdated or inaccurate. 
• Monitoring of employee activities: Organizations also monitor the activities of employees to ensure that they are complying with the organization's policies and procedures, as well as regulatory requirements. This can include monitoring employee email, phone, and other electronic communications, as well as monitoring employee access to sensitive data. 
• Compliance testing: Ongoing monitoring also includes compliance testing to ensure that the organization's policies and procedures are effective and that employees are following them. This can include testing the organization's transaction monitoring systems, reviewing SARs, and conducting mock money laundering scenarios.
• Banking Example: To guarantee regulatory compliance and reduce risks related to high-profile clients, identify politically exposed persons (PEPs) following onboarding. By doing this, the bank is able to stay transparent and steer clear of possible financial crimes.
  Cryptocurrency Exchange: To identify suspicious activity and stop fraud or money laundering, risk scores for accounts connected to negative media are reevaluated. This complies with compliance standards and guarantees a safer trading environment for all users. 
  Payment Service Provider: Looking for high-risk transactions coming from unfamiliar or unidentified devices in order to identify possible fraudulent activity. Users are safeguarded, and the payment platform's security is improved. 
  These instances demonstrate the value of adaptive monitoring even after onboarding. 

Ongoing monitoring is an important process that helps organizations to detect and prevent financial crimes, such as money laundering and terrorist financing, while also ensuring compliance with AML and CFT regulations. The examples above demonstrate how organizations can use specialized software tools, monitor the appearance of clients or their associates in the news or on sanctions lists, analysis of transaction data, regular reviews of client information, monitoring of employee activities and compliance testing, to conduct ongoing monitoring effectively.

With its successful tools, Sanction Scanner is ready to ensure the best quality for ongoing monitoring processes. Contact us or request a demo today to see our products in action.