Do you ever think about the difference between ongoing monitoring in AML monitoring and initial screening? According to Jane Doe, an expert in compliance, “Ongoing monitoring is a vital part of any good AML program.”
The first screening activity that the financial institutions have to carry out is identifying the customers and identifying probable risks.
Illicit fund launderers are continually trying to identify new methods for this illegal activity. So, government regulatory agencies ask banks to continuously monitor customer activity even after it undergoes the initial screening.
Continued monitoring provides very much-needed protection. It operates in a much different way than the very first checks performed as soon as a new relationship is initiated.
These differences will be outlined in detail in this article, as how ongoing AML monitoring is a critical link in any financial crime prevention strategy.
Initial Screening Process
The initial screening happens when a new customer first wants to engage in business with a financial institution. The bank will review the public records of known criminals and terrorists.
They will also review the activity of the person or business to determine if there is something that jumps out as suspicious. The first AML screening catches red flags before starting an ongoing relationship.
To remain compliant with the provisions of the AML regulations, it utilizes AML solutions that include name screening and risk ratings.
Since 2023, 57% of financial institutions have been implementing machine learning to improve AML detection.
Bonus: Consult our experts on how you can have AML screening tools and services tailored to best fit your business risks and objectives.
Ongoing Monitoring
Ongoing AML monitoring is the regular, continuous observation of existing customers’ transactions that all financial firms ought to carry out.
Ongoing monitoring is different from initial screening in that whereas initial screening occurs only once, ongoing monitoring is a continuously long-lasting AML screening process.
It applies updated AML services and technologies to monitor suspicious transactions or inconsistencies over time. It is through such early detection of criminal behavior or suspicion of money laundering.
It is based on customers’ spending patterns or financial dealings containing risks that the person comes under the scanner.
With AI and machine learning, reports from the industry claim an increase of 40% in detecting suspicious activities, increasing existing AML monitoring.
Frequency Differences Outlined
Initial screening in anti-money laundering is a one-time check at the opening of the account. Most cases require further monitoring, depending on how long the customer stays active.
Regulators require different types of frequencies, such as checking high-risk clients’ activity monthly or every time they execute a large transaction.
Regular ongoing AML compliance screening helps businesses realize red flags that initial screening missed and witnesses a longer history of their financial actions. It is a major part of getting one step ahead of changing AML threats.
In 2023, global regulators stressed AI and machine learning in amplifying the efficiency of ongoing AML monitoring and speeding up the detection of suspicious activity.
Trigger Events Compared
Both onset and continued monitoring look for suspicious activity but focus on two distinct triggers.
Onset screening is mainly performed to monitor for eminent associations involving criminal history.
Continuous AML screening must be aware of the current trends in money laundering. It closely monitors for trigger events that include massive transactions, international wire transfers, and high-risk business transaction frequency.
In a continuous refinement of what triggers alarms against money laundering, the ongoing monitoring solutions can best follow subtle criminal behavior in the long run.
As of 2023, global fines related to AML violations surpassed $5 billion, showing that enforcement has become increasingly important.
Data Sources Contrasted
Initial AML screening relies considerably on basic customer identification and screening services data.
It only provides a point-in-time picture. With continued monitoring, financial organizations must exploit richer sources of information.
Compliance teams need real-time access to the technology for ongoing AML screening and alerting.
They also monitor third-party databases and public industry reports for up-to-date ML/TF risks and red flags.
This expanded monitoring data helps identify suspicious connections or anomalies that initial checks based on sparser application information might have missed.
In 2023, the global AML software market had reached $3.2 billion, testifying to the increasing investments in advanced screening and monitoring tools.
Alerts Handling Variance
While initial AML screening can throw up some superficial alerts, constant monitoring keeps continuously throwing up new ones.
With the initial checks, some concerns can be looked into straight away. Continuous AML screening technology produces alerts that need different responses over time.
Keeping monitoring policies ongoing ensures all warnings are still being addressed properly and all unresolved or multiple repeating issues are escalated.
Rigorous alert management helps ensure that there are valid risks against false alarms. 95% of alerts are false positives.
Risk Mitigation Advantages
Ongoing AML monitoring offers the following important benefits beyond initial screening, which are only in fighting financial crime risks. Continuous monitoring solutions give businesses the following advantages:
- Ongoing systems find new laundering techniques and suspicious activities much earlier than initial screening systems as the tactics of criminals evolve.
- Fewer risky transactions that somehow dodge initial checks are adduced to visible patterns over time that continuous systems flag.
- Initial screening only captures static customer information. Continuous monitoring observes dynamic transactions between businesses that may point to a more critical money-laundering operation.
Contact us to find out how continuous monitoring can enhance your organization’s AML program and fight financial crime better.
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