In the majority of countries, anti-money laundering legislation requires Ongoing Customer Due Diligence (OCDD). OCDD includes keeping customer information up-to-date, customer screening and transaction monitoring. OCDD enables any irregular or suspicious activity to be detected and it ensures the customer’s transactions are consistent with the organisation’s knowledge of the customer and the customer’s risk profile.
Despite very few jurisdictions making automated transaction monitoring mandatory, an organisation will require automated monitoring if the nature and scale of the business demands it. Furthermore, businesses – especially those that are subjected to principles-based legislation – will need to demonstrate their transaction monitoring framework is tailored to the risks of their business and that it effectively manages, mitigates and detects money laundering. At some point the business may also need to evidence this to their regulator.
What therefore ensures an automated TM system is effective? Below are some guidelines that businesses should consider when evaluating automated monitoring software.