The need to monitor transactions in line with Anti-money Laundering laws and regulations cannot be overlooked as banks and other financial institutions process transactions running into trillions of dollars annually. Electronic money transfers and the growth experienced recently in the financial technology (fintech) industry have largely been responsible for the increase in the volumes of financial transactions. 
 

The movement of funds electronically has become very simple and much easier than at any other time in the past. As good and encouraging as this is for the growth of businesses, a downside to it is that financial crimes can also be very easily perpetrated much more than before.
 

Transaction monitoring is crucial to preventing the rise of criminal activities along with the financial technology boom. 
 

What Is Transaction Monitoring?

Transaction monitoring is the process of tracing, tracking and analysing a customer's financial activities (past or present) to identify fraudulent or suspicious transactions that could be pointers to money laundering, terrorist financing or other forms of financial crimes. 

For transaction monitoring to work effectively and efficiently, there is a need for the deployment of well-trained human personnel as well as good and highly potent software tools (Artificial Intelligence).
 

Anti-money Laundering (AML) laws and regulations are put in place to detect, prevent and report financial crimes as soon as possible.
 

Recommended: What Is Anti-Money Laundering And Why Does It Matter?
 

What Are Transaction Monitoring Softwares? 

Transaction monitoring software allows businesses to prevent fraudulent financial activities by monitoring transactions as they occur or over some time. The types of transactions that can be monitored include cash deposits, electronic money transfers and withdrawals. 
 

With Anti-money Laundering (AML) transaction monitoring software, businesses, banks and other financial institutions can easily monitor and analyze huge amounts of data that could reveal fraudulent activities.
 

Read also - AML Transaction Monitoring Software: Everything You Need To Know

What Are The Benefits Of Transaction Monitoring Software For AML?
 

There are numerous benefits of transaction monitoring software for AML. Some of them will be discussed below:
 

1. Instant And Real-Time Detection Of Fraud

Before the introduction of transaction monitoring software for AML, fraudulent activities were usually discovered after they have been conducted, usually by looking at financial transactions over some time. But with the advent of transaction monitoring software for AML, banks and other financial institutions can easily track and flag fraudulent financial activities as they are being perpetrated. 
 

This makes Anti-money Laundering efforts proactive instead of reactive. When financial crimes are detected in real-time, it becomes easier to apprehend suspects and achieve the aims of Anti-money Laundering laws and regulations.
 

2. More Secure Financial Transactions

Closely linked to the benefit of real-time detection of fraud is the benefit of more secure financial transactions. With transaction monitoring software for AML, banks and other financial institutions can easily detect, flag and report suspicious or fraudulent financial activities. This will go a long way in preventing other customers of the banks from being victims of fraudulent activities. 
 

Where anyone has already fallen victim to such fraud, it becomes easier to track the accounts involved in the process. With transaction monitoring software, all things are made bare before the eyes of banks and other financial institutions.
 

3. It Makes For Prompt And Easy Reporting Of Suspicious Financial Activities

Anti-money Laundering laws and regulations make it mandatory for certain businesses to report suspicious financial activities. In Nigeria for instance, banks and other financial institutions are mandated by law to notify the Special Control Unit Against Money Laundering (SCUML) when transactions above certain thresholds are made by individuals and corporations. 
 

Without transaction monitoring software for AML, reporting such suspicious financial activities will take ages, considering the large number of transactions processed and recorded by financial institutions in a day. But the use of transaction monitoring software for AML by banks and other financial institutions has made detection and reporting of suspicious financial activities (known as Suspicious Transaction Report) prompt and easy respectively. This in turn makes compliance with regulatory requirements easy for them.
 

4. Easy And Efficient Risk Management

When a business cannot easily identify its risks, such a business can neither manage nor mitigate the risks associated with the business. Transaction monitoring software for AML has greatly assisted banks and other financial institutions in properly identifying, assessing and managing the risks associated with their business operations. This way, they are not taken unawares by fraudulent financial activities. 
 

5. Improves The Trust And Confidence Of The Public

When customers are assured that their funds in the custody of banks and other financial institutions are safeguarded and can be accounted for at any given time, their trust and confidence in these institutions increases. 
 

One of the reasons banks and other financial institutions enjoy such confidence is the deployment of transaction monitoring software for AML. In instances where funds were fraudulently moved, transaction monitoring software for AML has been used to track the movement of such funds, showing customers that financial transactions are not shrouded in mysteries.
 

6. Automates Manual Processes And Reduces The Operational Costs Of Anti-Money Laundering

The time and resources that would have been spent to manually monitor transactions are greatly reduced by the deployment and use of transaction monitoring software for AML. Human errors in transaction monitoring processes are eliminated and businesses will have more profit at the end of the year because Anti-money Laundering (AML) operational costs have been greatly reduced.
 

Conclusion

In our current world where tons of financial transactions are conducted daily, banks and other financial institutions are faced with the regulatory requirement of monitoring these transactions to detect, prevent and report suspicious and fraudulent financial activities. 
 

But looking at the volumes of transactions being processed daily by banks and other financial institutions, using human labour to monitor transactions will be such an arduous and herculean task. The deployment and use of transaction monitoring software for AML will lift this burden off the shoulders of banks and other financial institutions. 
 

For efficient transaction monitoring software for AML, book a demo today.