Though banking institutions want to assume the best about every customer that transacts with them, bank staff have to watch out for some bad apples. Like money launderers and financiers of illegal activities, Malicious agents can take on the guises of honest customers when they avail of your bank’s services. That’s why a bank like yours must have some form of customer surveillance and transaction monitoring system in place.
This kind of system is meant to assess customer activities for any behavior that may cause alarm. Examples of the activities that you should regularly survey are money transfers, deposits, and withdrawals. If any of these involve suspicious amounts, occur at erratic times, or seem uncannily coordinated, your system should bring them to your attention. But is your current surveillance and monitoring approach doing enough to protect your bank from the taint of financial crime? Besides, will it be able to withstand the increasing challenges of anti-money laundering (AML) compliance from the strict regulators of the financial industry?
It may be high time for your bank to revamp its current transaction monitoring processes. Here are five good reasons to rethink your traditional surveillance and monitoring methods and consider a pattern-based, data-driven, and tech-smart approach.
Money Launderers and Criminal Networks Are Getting Better at the Game
An urgent reason for you to abandon your current surveillance and monitoring methods is that they won’t hold up against this generation of financial criminals. Today’s money launderers and other backers of illicit activity are getting alarmingly good at covering their tracks. They remain passionate and adaptable students of this dark art, as many will stop at nothing to funnel money into their cause.
If you know that these people are actively stepping up their game, then your bank must do the same. This alone should compel you to update your current monitoring and surveillance protocols, in the interest of staying a few steps ahead of these criminals.
Your Transaction Monitoring Processes Are Too Focused on Individual Cases
Your current transaction monitoring workflow probably hinges on the following steps:
- Sorting through a large volume of individual cases one by one
- Flagging any suspicious transactions on a case-to-case basis
- Classifying cases as either false positives or issues of true concern
Then it’s lather, rinse, and repeat for your banking staff. The staff who spend so much time on individual cases have virtually no leeway to step back and see the bigger picture. In their quest to sort individual false positives, they may even let the false negatives—or instances of actual financial crime—go undetected.
A bank needs to invest in a transaction monitoring system that eliminates the silos of the per-case approach and lets staff derive insights on patterns. Patterns or webs of suspicious customer behavior are the most accurate clues of criminal activity. You have to empower your staff to do more than just identify individual cases. They must be afforded a real-time, 360-degree level of transparency for all of your bank’s customer transactions.
Your Legacy Transaction Monitoring System Isn’t Efficient Enough
Your current surveillance and monitoring protocols may already lack the efficiency you need. Do your staff members spend a lot of time sifting through customer transactions, all while feeling like the work is insurmountable? If that’s the case, then your system simply isn’t up to speed.
There is honestly no point in spending a lot of time and a lot of money—on systems and protocols that you know won’t give you comprehensive enough results. Now is a good time to invest in a solution that makes good use of automation technologies to screen, surveil, and report customer transactions. That will streamline the work so that full transaction monitoring can be implemented on a large scale, without taxing bank employees.
Your Surveillance and Monitoring Methods Aren’t as Data-Driven as They Should Be
Nowadays, it’s become more apparent that banks need data-driven approaches to issues as complex as AML. Ideally, you and your staff should feel like you’re working seamlessly with an updated web of information. This definitely beats culling financial data from disparate sources, like separate spreadsheets, and trying to make sense of it all manually.
To truly improve your surveillance and monitoring approach, you’ll need a system that can deftly handle large volumes of customer data. The system should make sense of different data types representing financial transactions across multiple business lines. It should also be able to implement data quality checks on fields like names and addresses, and then see if these are mentioned on any blacklists or sanction lists. Ultimately, your system should be able to do the difficult but necessary work of making sense of customers’ financial data for you.
Your Current Transaction Monitoring Methods Aren’t Making AML Compliance Any Easier for You
Lastly, your bank is due for a change if your traditional approaches aren’t making AML compliance easier for you. If it’s still a pain to generate regular AML compliance reports and forward them to your regulators in a timely manner, it’s time for an overhaul.
Your solution should allow you to compile regular reports for the decision-makers in the AML compliance team. That way, they’ll be able to derive accurate insight on the success of the bank’s AML approaches. These reports will also help you meet the demands of your regulators, who have likely tightened their compliance standards in recent years. An upgraded system will keep you in their good graces, as well as help you avoid steep penalties for late or incomplete reports.
Conclusion: Modernize Your Bank’s Surveillance and Monitoring Protocols Now
Today’s banking industry faces a lot of pressure to think forward and to implement digital transformation into its operations. But in the area of transaction monitoring and surveillance, a bank’s initiative to step up will be extremely rewarding to them. If this is something your bank commits to modernizing today, you’ll have an easier time protecting both your coffers and your reputation. Consider investing in an up-to-date transaction monitoring solution and securing a safe, prosperous future for your bank and your customers.