Program Design
Develop monitoring rules and scenarios based on your ML/TF risk assessment and customer profile.
Transaction Monitoring
Transaction Monitoring Program
Guide to transaction monitoring programs for AML compliance. Understand monitoring requirements, system design, and best practices for detecting suspicious activity.
Key Information
Understanding Transaction Monitoring Programs
A transaction monitoring program is a critical component of AML compliance, enabling businesses to detect unusual activity that may indicate money laundering or terrorism financing. Effective programs combine automated systems with human analysis to identify and investigate suspicious transactions.
The AML/CTF Act requires reporting entities to conduct ongoing customer due diligence including transaction monitoring. Your monitoring program should be designed based on your ML/TF risk assessment and regularly reviewed for effectiveness.
Transaction Monitoring Program Elements
Rule Development
Create detection rules targeting known typologies, unusual patterns, and threshold breaches.
Alert Generation
System generates alerts when transactions match rule criteria for investigation.
Alert Disposition
Investigate alerts, determine if suspicious, and document disposition decisions.
Quality Assurance
Regular review of monitoring effectiveness, false positive rates, and rule performance.
Program Review
Periodic assessment of program adequacy against changing risks and regulatory expectations.
Frequently asked questions
What is a transaction monitoring program?
A transaction monitoring program is the system of rules, processes, and controls used to detect potentially suspicious transactions. It typically involves automated monitoring systems, alert investigation procedures, and reporting workflows.
Is transaction monitoring required under AML/CTF?
Yes, reporting entities must have ongoing customer due diligence including transaction monitoring. The AML/CTF Rules require appropriate monitoring based on the nature and purpose of the business relationship.
What should a transaction monitoring program cover?
Programs should cover: rule design based on risk assessment, threshold monitoring, pattern detection, sanctions screening, PEP monitoring, alert investigation procedures, documentation requirements, and quality assurance.
How do I optimise my transaction monitoring program?
Optimisation strategies include: regular rule tuning to reduce false positives, risk-based alert prioritisation, automation of routine tasks, quality assurance review, and periodic independent assessment of program effectiveness.
Related resources
Transaction Monitoring Support
ARCaml provides transaction monitoring services and support for AML compliance.