Financial institutions need to follow AML/BSA requirements so they can have confidence in their compliance process and ease the pressure from regulators. Part of this process is transaction monitoring to identify any risk of money laundering, or other financial crime. If a suspect transaction is found, a thorough suspicious activity report must be passed along to regulators and law enforcement.

To conduct this ongoing monitoring of customer transactions, such as transfers, deposits and withdrawals, financial institutions need a transaction monitoring system (TMS). However, the wrong or outdated TMS can bring challenges which may mean a new one needs to be implemented.

 

Common TMS challenges

Here are some of the common challenges which a TMS can bring to financial institutions:

  • Not being aligned with institutions risk appetite and a ‘one size fits all’ principle which can lead to a drain on resources and high costs
  • Producing a high number of false positives which wastes time, costs, and manpower
  • Thresholds are too low or follow outdated procedures, so suspicious activities go undetected as criminals learn how to operate outside of these rules
  • Doesn’t keep up with regulatory changes and leaves the institution vulnerable to fines
  • Lacks artificial intelligence and produces inaccurate data
  • Insufficient TMS training for staff which heightens chances of human error and dismissed risk.

If you’re experiencing one or more of these common challenges, it may be time to plan for a new AML transaction monitoring system to save yourself headache and better use your resources.

How to plan for a new TMS

  • Cleanup and organize your database so you have clean and high-quality data
  • Decide what criteria you need when selecting your new TMS, for example; pricing model, reporting capabilities, integration with your other data software, customer segmentation capabilities, customization of the workflow, scalability and overall responsiveness
  • Introduce a TMS which has AI and machine learning capabilities to get more accurate data, fewer wasted resources, and reduced false positives
  • Assess your thresholds and create rules based on customer behavior, profiles, and ultimately their risk scores
  • Calibrate your TMS to your institutions risk appetite
  • Keep aligned with regulations and aware of any discrepancies or differences globally
  • Conduct training for analysts and investigators so they have a comprehensive understanding of your new TMS
  • Once implemented and staff are experiencing fewer false positives, they can take the time to properly review alerts to look for any suspicious activity
  • Make sure your new TMS produces reports which will be useful for your business. 

Our Automated Investigator can combat common TMS challenges experienced by financial institutions by providing a risk-based approach to AML. This helps solve problems around data, risk segmentation, and reducing false positives to provide a streamlined and efficient customer monitoring process. You’ll even get your investigation results in Financial Crime Investigation Reports, helping your team focus their time on more complex tasks. Find out more.

How AML RightSource can help

We’re here to help you along the way with this process, simply get in touch to talk about our Financial Crimes Advisory team. Get strategic guidance from industry experts whose focus is to help you meet the high standards of regulators and remain compliant. They’re aware of the hurdles your institution faces and are on-hand to provide support for your financial crime detection, program monitoring and system implementation.

Get in touch so we can help you overcome TMS challenges and plan for a better, risk-approached AML compliance process.