Having a well-structured transaction monitoring division has never been as important as today.
Picture this: a bank has let dirty money slip through the cracks, and aided criminals in laundering it. Sounds far-fetched?
Let’s see: in 2014, one of the global banks was fined with $8.9 billion for allowing a similar sum of illegally obtained money into the US financial system. It was no exception, there are other banks that fail to comply with AML regulations, especially in the area of transaction monitoring. This must result in hefty fines.
In 2001, after the terrorist attacks in the United States, the Patriot Act was passed, criminalizing terrorist financing. In the EU, there have been several AML directives since 1991, tightening finance-related law on the local and international levels and hence affecting transaction monitoring requirements.
The 5th EU AML Directive of 2018 has broadened transaction monitoring by parties from high-risk jurisdictions, while the next one will focus on tougher unishments.
These constant regulatory changes made financial institutions invest heavily in their human capital and systems preventing money laundering. However, as new areas came under supervision and money laundering patterns evolved, much more precise and work-intensive transaction monitoring methods became a must.
AI-based transaction monitoring
The most commonly used rule-based systems trigger so many alerts that bank teams are unable to verify them. What’s more, most of these alerts, up to 90%, are false positives, ending up classified as usual transactions that still have to be reviewed. There’s human error involved too: an overworked employee may wrongly categorize an alert, which results in going back-and-forth with the verification process. This costs lots of time and effort.
So why not use modern, AI-based technology and make all the routine processes automated?
That’s just how we thought about tackling the problem several years ago. Today, our AI-based transaction monitoring system not only reduces the false alarms ratio, but also detects anomalies in fraudulent transactions, the ones not captured by traditional systems.
Instead of forcing your employees to perform monotonous tasks, give them a proper tool that will speed up their decision-making process and allow them to focus on more demanding challenges.
Just remember what Sir Richard Branson said: “If you look after your employees, they'll look after your customers."