Monitoring of transactions is a process that supervises the customer’s money flow such as transfers, withdrawals, and deposits. An AML transaction monitoring system detects any suspicious activity in a customer’s account. Transaction monitoring solutions are a perfect tool for banks to indicate any money laundering or other financial scam taking place.
According to United Nations statistics on laundering funds, 2% to 5% of the global GDP is laundered annually. Depending on the year, such an amount is between $800 billion and $2 trillion. The social effect of money laundering assists drug traffickers, smugglers, terrorist funding, and other criminals in expanding their activities. The worst scenario happens when due to money laundering, the economic power shifts from governments and nations to the hand of criminals.
In the global economic structure, banks and financial institutes must standardize their AML transaction systems to shear the global nature of money laundering. They should start digital payment transaction monitoring to reduce criminal activity and protect businesses from financial loss. Following are some benefits of online KYT: know your transaction in businesses.
Benefits of Automated AML Transaction Monitoring Systems
Money laundering is not only a major issue for flourishing marketers and businesses but also alarming for new companies. As the new markets open their bank accounts, they become vulnerable targets for money laundering activities. Money laundering causes companies financial loss and destroys the reputation of financial institutions.
In 2021 UK Financial Conduct Authority FCA fined HSBC Bank £63.9 million because of not following the regulation on transaction monitoring. The FCA found many serious weaknesses in the transaction monitoring solutions of HSBC. Under the money laundering regulation 2007, HSBC does not comply with the AML and risk-sensitive policies on the procedure of payment transaction monitoring.
Regulatory industries are always trying to protect financial institutes from money laundering and terrorist financing. That’s why many laws and regulations were created for companies to make a secure environment for the money flow. These all have to comply with the AML regulation and other laws.
The expedited growth of financial transactions creates a challenge for businesses to comply with the AML regulations to prevent illegal activities. AML regulations are continuously evolving, and financial institutes must quickly adapt to compliance. Online AML transaction monitoring systems update financial institutes with real-time changes in regulations and ensure that all regulations comply. That’s why financial institutes and businesses need electronic monitoring of transactions.
The essential need for payment transaction monitoring can not be neglected, as banks and other financial institutes have to process trillions of dollars in transitions annually. Digital transactions and the progress of online businesses are the reason behind the increased volume of financial transactions. The transaction of the money was not easy in the past as it is now. It also makes it easy for financial crimes to be perpetrated much more than before.
The digital transaction monitoring solution is a special design to enhance financial firms’ security and prevent financial crimes such as money laundering and drug trafficking.
AML transaction monitoring systems provide a wide range of information, including real-time transaction data, customer information, and history of payment transfers. This information is worthwhile for financial institutes to identify and stop illegal activities. Customer data ensures financial institutes about transactions and also checks that they comply with regulations. In short, AML transaction monitoring systems provide the necessary data for the suspicious activity report (SAR).
Online AML transaction monitoring systems work on advanced automated technology. It not only speeds up the tracking of transactions but also reduces false positive results. Transaction monitoring solutions ensure authentic results by developing the most accurate rules and scenarios for financial institutes. It also creates a user-friendly interface without coding knowledge so employees can efficiently work on it.
Companies have to conduct regular risk assessments according to their policies. Digital transaction monitoring solutions customize risk assessment which businesses can change based on country, currency, and regulations. It easily complies with the needs of businesses so they can improve and grow without risk. Automated AML transaction monitoring systems reduce human errors and also eliminate the extra cost of manual monitoring, which directly increases the profit of a business at the end of the year.
Ultimately AML Transaction Monitoring System is a Lifesaver
Nowadays, where tons of transactions happen daily, banks and other financial institutes face different regulations, such as knowing your transaction KYT requirements and AML/KYC, to detect and prevent fraudulent activities. They want advanced technology for their backbone to highlight forgery and suspicious activity. Using automated AML transaction monitoring systems will reduce this burden from the shoulders of banks and other financial institutes.