AML transaction monitoring helps in identifying suspicious activity in the transactions. But, AML screening helps identify any entity/customer/party that is a part of any regulatory lists or blacklists.
AML or Anti-money Laundering transaction monitoring facilitates a wide range of benefits for banks and financial institutions. It won't be wrong to say that several suspicious activities in bank transactions have been linked to terrorist activities in the past. With criminality and criminals getting access to hordes of money, it is not only dangerous but also incredibly disastrous.
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Thanks to the advent of technology, modern bankers and financial institution owners have a sound way to identify frauds and terrorist financing activities, and more. With an aim to complete due diligence, these financial organizations prevent and deter any kind of financial crime. However, considering the difficulties intertwined with this process, especially in terms of time, resources, and cost, it might not be possible to eradicate these criminal offenses.
Therefore, financial & banking institutions pursue a risk-based approach to identify and understand customers. This helps in mitigating any kind of potential risks associated with financial crimes. Steps like KYC screening also serve as a significant way to analyze customer profiles and predict future activity, raise alerts, and generate reports. Based on their risk levels, created alerts help the officials to prevent misuse of their platform.
Transaction monitoring includes blacklist screening, customer profiling, customer screening, denied party screening, and many more. If a customer or party is found to be suspicious, then it red-flags the situation and creates an alert. Analysis of customer profiles serves a variety of purposes, which includes anti-money laundering, counter-terrorist financing requirements, and suspicious activity reporting. Similarly, other kinds of reporting obligations follow.