Once upon a time, you went to a shop, bought your items, and paid in cash. But with the advent of the digital age, that went out of the window – now, online payments are the norm, especially given the restricted movement that came with corona.
Unfortunately, with billions of financial transactions occurring around the world each day, criminals are now manipulating the system to commit crimes such as money laundering and terrorist financing. And it’s on you, the organisation that allows the transaction, to flag and report the suspicious transaction. Any institution, authorities state, that allows suspect online transactions could incur huge penalties!
What is Transaction Monitoring?
‘Transaction monitoring’ refers to automated monitoring systems that are implemented as part of an organisation’s infrastructure in order to fulfil compliance requirements and manage fraud. But what was once a simple process for IT and customer service teams is now becoming consistently more complex, especially given the booming transactions volume, ever-changing regulatory measures, and increasing customer expectations.
The Way of the Future
In this day and age, manual analysis of every transaction is utterly impossible – there’s simply too much data, and it’s arriving too quickly. Add to that the recommendation from the Financial Action Task Force, which instructs payment services firms to monitor customers’ transactions for suspicious activity as part of a sound compliance program, there’s only one way forward: Automated Risk-based AML.
State-of-the-art software that enables payment services firms to balance monitoring responsibilities with customer experience, Risk-based AML allows organisations to:
- Execute tailored risk assessments
- Implement strategies to address risk
- Exceed both their compliance and customer obligations
The key features of an ideal transaction monitoring solution
So you know you need a transaction monitoring system for payments. And you’re aware of the need for risk-based AML software. But what should you look for to ensure you’re getting a system that’s perfectly tailored to your needs? Here are the 3 key features of an ideal transaction monitoring solution.
1. Bespoke rules
AML transaction monitoring systems rely on algorithms, and these depend on rules. But as each organisation is as different as their clientele and their needs, the ability to test, build on, or modify these rules is crucial. The better the rules, the better the algorithm works – and the lower your rate of false positives and false negatives, which cost time and money. But in an ever-changing regulatory landscape, rules that were sound just a 6 months ago may now be useless given the impact of the pandemic.
The solution? Ensure you choose compliance software that can not only be tailored to your exact needs, but also comes with sound support from a trustworthy team.
2. A unified platform
Many companies make the disastrous mistake of choosing separate vendors for different monitoring applications. And even those who decide on a single vendor may find they’ve signed up for an inefficient, patched-together system that lacks the ability to integrate data from several applications.
Instead, you’ll save your compliance staff huge amounts of cost and effort by choosing a complete and comprehensive payment monitoring solution (which includes transaction monitoring, payment and client screening, client activity reviews and enhanced risk assessment) from a single, reliable vendor with an excellent track record.
3. Flexible deployment options
Once you have emplaced a unified system with bespoke rules, and you’re happy you’ve chosen a reliable vendor, the final key is data hosting. Where your data is hosted is crucial, so beware providers who only offer one data hosting option!
The best providers will offer all 3 of the core hosting options.
● Cloud-based (hosted by vendor)
● Cloud-based (hosted by the organisation)
● On premise server-based
Good providers will also help you choose a deployment system that suits your compliance needs, and advise on the cost and security of each of the 3 core hosting options. Which means that your bespoke transaction monitoring system will not only keep you compliant, but will also suit your staff, boost customer satisfaction and – ultimately – increase your profit.