Increasing Transaction Monitoring Effectiveness

Increasing Transaction Monitoring Effectiveness

This IDC Perspective discusses the history of transaction monitoring from the inception of the regulatory requirement for the evaluation of transactions for potential money laundering to the 1970 Bank Secrecy Act (BSA) to the evolution of improvements to transaction monitoring solutions, focusing on the functionality that should be considered by all financial institutions conducting transaction monitoring so as to improve the effectiveness of their transaction monitoring program as much as possible.Advances in technology through cloud computing — which has in turn increased artificial intelligence and machine learning capabilities — have resulted in the expansion of data sets used for transaction monitoring as enhancement with respect to the models designed to produce alerts of suspicious transactions and potential money laundering that can significantly enhance the effectiveness of the bank's financial intelligence unit.The latest development in terms of additional functionality for transaction monitoring solutions — which in many cases in still in development — is the use of GenAI to improve the quality of SARs filed with FinCEN."Given the improvements in technology, banks should consider reviewing their existing transaction monitoring solutions against some of the enhanced capabilities of the more recently developed solutions, as the gains in efficiency can be significant," says Sean O'Malley, research director, IDC Financial Insights — Worldwide Compliance, Fraud, and Risk Analytics Strategies.

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