Payment Transaction Monitoring – An Advanced Stage from AML Screening

In the digital world, everybody is familiar with money laundering and how it is an illegal activity. The global regulatory bodies are making the regulations stricter than before to mitigate the issue. According to UN reports, approximately 90% of illicit money stays under the radar. There is a need for an advanced procedure that can quickly detect these suspicious monetary transactions. A Payment transaction monitoring method can facilitate companies in this regard. The system will not only detect illicit financial transactions but also ensure compliance with AML/KYC screening. 

Payment Transaction Monitoring System – What is the System?

The Payment Transaction Monitoring System screens the financial transactions of clients to distinguish between illicit, high-risk transactions, and suspicious exchanges from genuine ones. The software works in real-time and cross-checks information to declare its authenticity and legality. 

How Payment Transaction Monitoring System can Complement the Client Authentication system?

In the traditional procedures, companies perform Customer Due Diligence (CDD) to authenticate clients’ data. The same approach helps in creating a risk-based profile of the consumers. The KYC procedure helps in verifying clients’ identities during the onboarding procedure. The procedure works on the data mentioned on government-issued documents. This is critical in order to eliminate any chances of identity theft and corruption. The information is also cross-checked with global watchlists and PEPs lists to detect criminals. 

However, these procedures only scratch the surface of the problem and there is a need for a sophisticated system that can monitor the financial transactions of the clients. It will generate a comprehensive picture of the clients’ profiles. The payment transaction monitoring system will be quite useful in this matter. 

Possible Challenges During the Application of the Payment Transaction Monitoring System

  • Ineffective Case Management

To ensure that everybody in the company follows the guidelines, there should be proper communication between the team members. Effective communication will ensure that everybody is aware of the latest guidelines and implementing them on their level consistently. On the other hand, if there are no proper communication channels within the organization, it will result in poor compliance with the payment transaction monitoring process.

  • High Costs

The Payment Transaction Monitoring System can be applied within a company or strategically outsourced. In any case, it is a costly procedure to integrate the pre-existing technology. Even the ongoing monitoring and feature updates cost a lot. 

  • High Resource-consumption

The application of the advanced procedures is resource-effective in many ways but the implementation of the payment transaction monitoring system means that there should be dedicated staff members to deal with risks and manually work on emergency alerts. They should also produce reports at the end for the global watchdogs. 

  • Elevated Time-consumption

The implementation of the payment transaction monitoring system means the influx of huge volumes of financial data. Of course, it will have both types of transactions (suspicious and genuine ones). The suspicious financial activity will also generate a pool of alerts that demand time and effort for correction. In this way, the transaction monitoring system takes a lot of time. 

How can a Transaction Screening Software be Employed in Modern Industries?

A payment transaction monitoring system is part of the AML screening procedure. The system is fully automatic with risk management features. The following ways can facilitate an organization in the implementation of the procedure.

  • They should integrate transaction screening and customer verification systems for effective results. In such a manner, the end result will show a complete picture of the clients’ activities. It will be the same case as the commonalities between CDD and KYC procedures. 
  • The team members should analyze the account activities of customers and check for any discrepancies. Nowadays, fraudsters can use different strategies to hide their illegal money. For instance, they can open accounts in banks for their advantage and exploit the loopholes in their security systems. 

Final Remarks

Finally, it should be clear that transaction monitoring is a critical part of the AML/CFT guidelines as it efficiently supports the prevention of financial crimes. Fraudsters have years of experience in the black market and they have diverse tricks to achieve their goals. First, they perform some test transactions to gather intel about the system. If their attempts give the desired results, they apply a bigger and more complex strategy with higher financial returns. 

These days, it is compulsory for every business to implement a payment transaction monitoring system, or else they can face hefty fines from the global watchdogs. The system supports companies in the going monitoring procedure which helps in quick fraud detection.

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