Sumsub released the Complete Guide to Transaction Monitoring, which is a global software firm that offers scalable KYC, KYB, and AML solutions for the entire customer experience to offer a comprehensive overview of transaction monitoring as a vital component of the verification system.
As per this Guide, transaction monitoring is essential for businesses offering financial products and services, since it allows them to execute risk evaluations and identify suspicious activities, This Guide was created by Sumsub's compliance and fraud prevention team along with Pismo, an all-round, cloud-based financial service provider encompassing all fundamental banking and payment-related operations.
The core purpose of this professional handbook is to demonstrate to organisations in the fintech, banking, insurance, gambling, and e-commerce industries how to recognise transactional theft, reinforce their defences, maintain complete compliance, and optimise customer retention rates at the same time.
When companies do not keep an eye on transactions, they are more likely to run the risk of money laundering, financial crimes, and other fraud occurring on their platforms. According to the U.S. Federal Trade Commission, theft damages reached $8.8 billion in 2022, and the United Nations estimates that costs due to money laundering contribute to $1.6 trillion yearly.
The reason for this is that nations have been strengthening their AML regulations.
If businesses fail to comply, they suffer substantial penalties, reputational harm, and even licence cancellation. In December 2022, Danske Bank was fined over $2 billion for insufficient transaction monitoring competence, poor AML infrastructure, and high-risk customers.
This guide provides an extensive understanding of the AML legal structure for transaction monitoring in the U.K., U.S., and EU in addition to corresponding documentation requirements.
Transaction monitoring is an ongoing procedure which is designed to identify irregular transactions made in the form of cash or virtual currencies. It is also used to identify other suspicious customer activities.
As per a study, it helps organisations stay secure from fraud while preventing potentially substantial financial loss. Although transaction monitoring is required for regulated companies, it can be useful for non-regulated companies as well if they want to have a further level of security against financial crime.
There are various ways that each industry benefits from transaction monitoring:
- A gambling or iGaming service can encourage prudent gambling by quickly identifying if a client spends in excess of what is shown on their financial statement, and a service can discourage exchange gambling by identifying multiple accounts;
- Banks are able to immediately spot indicators of illicit activity, like income that is significantly more than what is shown in the source of funds statement;
- Transactions beyond AML limits and strange purchasing patterns in online shopping should promptly set off alarms and be stopped;
- Illegal requests and scam practices can be found by insurance agencies.
According to the CTO and co-founder of Sumsub, Vyacheslav Zholudev,
“Today, it is more difficult for regulated companies to thrive during financial downturns since they must simultaneously maintain high passing rates, draw in new customers, and combat scams. Transaction monitoring is the ideal tool for organisations to use and maintain their optimistic ambitions and steer clear of fraud on the path to success. It has become a requirement for identity verification and authentication, and ought to be combined with KYC and AML checks. You can gain a comprehensive view of a user's background and be able to stop even the most complex fraudulent attack paths and patterns by merging consumer, business, and transaction verification into a single flow. This gives you further assurance that fraud risks can be decreased.” |
Also Read: Veriff Launched Cutting-Edge KYC Education Center to Simplify Identity Verification