What is Transaction Monitoring?

Transaction monitoring plays a critical role in AML by continuously screening transactions in real-time. These systems apply predefined rules to assess the risk associated with each transaction and generate alerts when any suspicious activities are detected. Our state of the art, fully automated “WatchEye” system provides an effective transaction monitoring program (TMP).

Types of AML Alerts

There are a variety of indicators that might breach an AML risk threshold, trigger an AML rule and red flag an individual transaction for further investigation by compliance officers. These typically include:

Deviations from Normal Behaviour: AML alerts will be triggered by transactions that do not match the typical behaviour of a customer, are out of the ordinary or which do not fit with a customer’s normal pattern of transaction activity.

Unusual Patterns: AML alerts may also be triggered by transactions with unusual or complex patterns, or suspicious payment routes. This may include reducing (structuring) the amount of cash deposits or withdrawals to avoid triggering transaction reporting rules, high volumes of transactions being made in a short period of time or making multiple transactions on the same day from different locations.

How our WatchEye Transaction Monitoring Works

 

Real Time Alerts: Our Transaction Monitoring systems employ rules-based methods to establish thresholds and identify suspicious activities. These systems use predefined rules to evaluate transaction patterns, setting specific limits that, when exceeded, trigger alerts. These alerts notify compliance officers about potential risks, ensuring prompt and effective responses to suspicious transactions.

 

Batch Processing Alerts: Instead of real-time monitoring, we offer clients the option to monitor transactions through batch processing, by analysing large volumes of transaction data in a scheduled, periodic manner. This involves collecting transaction data over a specific period, such as daily or weekly, and then processing this data in bulk. This method allows for the identification of suspicious patterns or activities by comparing current transactions against historical data and predefined rules.

 

Customised Alert Rules: Our Transaction Monitoring system enables you to create and customise rules tailored to your specific requirements. Additionally, we offer a comprehensive set of diverse rules commonly adopted by Reporting Entities, which align with AUSTRAC expectations.

Transaction Monitoring in Action

Example: A business account shows a sudden burst in small transactions just below the reporting threshold, indicating possible structuring to evade detection.

In this case, our Transaction Monitoring Program would recognise the unusual pattern of frequent, small transactions, generate an alert and flag these transactions for review to establish further information about the customer, including their transaction history. Our client would then submit a suspicious matter report (SMR) to AUSTRAC, which is essential for identifying potential illegal activities and helps in detecting and preventing the flow of illicit funds through Australia’s financial system.

Find out how we can help your organisation

FREQUENTLY ASKED QUESTIONS

Common Questions About Transaction Monitoring

Discover how our Transaction Monitoring solutions can protect your business and ensure AUSTRAC compliance. Learn how our systems for detecting suspicious activities, setting thresholds, and generating alerts make us the trusted choice for Australian businesses committed to regulatory compliance and security. Explore our innovative approach and understand why we lead the industry in safeguarding your operations against financial threats. With our solutions, stay ahead in identifying and preventing the flow of illicit funds through Australia’s financial system.
What is WatchEye?

WatchEye is our highly advanced, state of the art monitoring solution that allows customers to create customised “alert programs” from transaction monitoring, to KYC data monitoring. In fact, WatchEye was designed to screen, monitor and alert almost anything data related.

What constitutes an “appropriate” risk-based Transaction Monitoring Program?

An “appropriate” risk-based Transaction Monitoring Program involves assessing the unique risk profile of your entity and implementing measures that are proportional to the level of risk identified. According to AUSTRAC, this includes regular reviews and updates to ensure the program remains effective in identifying suspicious transactions. For more information, visit AUSTRAC’s guide on Transaction Monitoring.

How can entities effectively differentiate between “normal” deviations and suspicious activities?

Differentiating between normal deviations and suspicious activities involves setting clear parameters for what constitutes ‘normal’ behaviour based on historical data and understanding the context of the customer’s transactions.

How should entities handle the reporting of suspicious matters to AUSTRAC?

Entities should follow a structured process for submitting suspicious matter reports (SMRs) to AUSTRAC. This involves gathering all relevant transaction data, conducting a thorough review to confirm suspicions, and completing the SMR form accurately with all required information. For detailed guidance, refer to AUSTRAC’s Suspicious Matter Reports (SMRs) guide.

What are the potential legal implications for failing to comply with AML/CTF requirements?

Non-compliance with AML/CTF requirements can result in significant legal penalties, including fines and reputational damage. Entities that provide designated services must ensure they adhere to AUSTRAC’s guidelines to avoid these consequences.

What is an example of a specific predefined rule used in real-time transaction monitoring that Global Data can detect?

An example of a specific predefined rule used in real-time transaction monitoring is the “High-Value Transfer Rule.” This rule triggers an alert for any single transaction or series of transactions within a short period that exceeds a specified high-value threshold. This helps to detect potential money laundering activities by flagging unusually large transfers that are not consistent with the customer’s typical transaction behaviour.

How do we handle false positives in transaction monitoring?

False positives refer to alerts or flagged transactions that are incorrectly identified as suspicious or indicative of potential money laundering or terrorism financing activities. These are transactions that trigger the monitoring system’s predefined rules or thresholds, generating an alert, but upon further investigation, are found to be legitimate and not indicative of any illegal activity. To mitigate false positive alerts, we regularly review and adjust the thresholds and rules that generate these alerts. Additionally, we implement machine learning algorithms to help the system better distinguish between false positives and genuine suspicious activities by learning from past data.

What is the cost to implement a TMP (Transaction Monitoring Program)?

The cost is minimal, compared to the fines and legal ramifications imposed by regulators for non-compliance. Contact us for a customised, tailored quote.

What else can Global Data monitor and provide alerts for?

We offer monitoring beyond just financial transactions. Our system also tracks various critical data points, including; alerts for any changes in residential addresses, notifications for disconnections or changes in phone numbers and email addresses. Vital alerts for key events such as liquidations, bankruptcies, and criminal investigations. These capabilities are pivotal in detecting and preventing fraud. For a detailed list of all our monitoring solutions, please contact us.

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