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Transaction Monitoring

Preventing and detecting suspicious activities, financial sanction breaches or criminal offences are some of the foundations in the fight against money laundering and the funding of terrorism.

In line with FATF and EU standards, the local landscape, through the PMLFTR and FIAU IPs, mandates that subject persons scrutinise transactions undertaken on a continuous basis. The effective monitoring of transactions is essential in detecting whether these are consistent with the subject person’s knowledge of the relevant customer (including their business and risk profile) and to flag any transactions that are suspected to be connected to financial crime.

Whether you are using AI, have adopted automated rule-based systems, or are still using manual systems to carry out transaction monitoring, the challenges faced to ensure the smooth and effective running of these systems are still felt across industries. It is crucial in this ever-evolving regulatory environment to ensure that whatever system being used is and remains fit for purpose. Furthermore, the data gathered in the course of transaction monitoring represents an invaluable source of insights into the subject person’s AML risk profile and beyond.

Some challenges:

Systems generating a high volume of "false positive" alerts, requiring additional resources and costs;
Using an off-the-shelf tool which is not adapted to your specific operations and risks;
Some of these systems represent a ‘black box’ which users do not fully understand and are not able to explain, in particular when using AI and machine-learning (ML) models, leading to a lack of trust in the system and challenges to ascertain compliance with legal and regulatory requirements;
Poor data governance - Even if powerful tools are being used, analysing the underlying data often remains a challenge, with poor data quality and completeness leading to ineffective monitoring.

How can PwC help?

Overall Compliance Review
Optimisation / fine-tuning
Data Governance

Overall Compliance Review

Depending on your needs, PwC can carry out a one-off or periodic review of your transaction monitoring procedures to ensure that you are implementing a process which is effective as well as compliant with local regulations. This would include assessing the effectiveness of the rules, parameters or thresholds used. We can provide ongoing support and advice with regards to the design and implementation of new processes, or enhancing existing ones.

Our review can be further extended to alerts and how these are handled, whereby PwC can carry out sample reviews and testing of alerts generated and conduct quality checks to ensure that processes are being efficiently executed. We can also assist in verifying that alerts are being handled in line with procedures and are being documented correctly.

Optimisation / fine-tuning

PwC can help optimise the existing algorithms and rules used in your transaction monitoring systems to ensure that the system is specific to the industry you operate within, in line with the risk-based approach, and operating in the most efficient manner, thereby reducing the number of false positive alerts.

Leveraging on our vast knowledge of technology and tech-enabled tools, we can also assist you with the transition from a manual or rule-based system to an anomaly-based system to reap the benefits of AI and ML in your transaction monitoring efforts. Our expertise can also be helpful in calibrating your existing systems to perform better.

Data Governance

High data quality is crucial for proper and error-free process flow. Good data governance and a focus on data quality are at the core of an effective transaction monitoring system. PwC can help with assessing data quality and processing on a regular basis, and also with understanding the insights the data is providing on the subject person’s business and risks.

As the regulatory landscape keeps evolving rapidly, managing AML/CFT risks remains centre stage.

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