What happens when your AML transaction monitoring rules are static

Although we live in a cutting-edge, modern tech world, a large number of payment service providers still use outdated, static systems to flag and identify suspicious transactions and payments. Remedying false positives can be a colossal waste of your team’s time. The situation can also lead to customers’ legitimate transactions being delayed while the team is handling and reviewing possible false positives. Given these facts, it is no surprise that a decade-old flagging system is no longer feasible for a number of reasons.

Too many flagged transactions

Most systems still use the static rules principle, which means that the system does not adapt to new rules but follows a stringent pre-defined list of criteria.​ This​ frustrating factor leads to transactions being flagged as suspicious because of their unique and modern ‘signature’. Obviously, if the signature is not found in the old processor’s list, it will mark it as a false positive, putting the expensive burden of review on the compliance team. Apart from being costly, a long review process increases operational costs, frustrates genuine customers and puts the company’s Anti Money Laundering (AML) compliance at risk.

Innovative criminals take advantage

Criminal exploits are made easier when old systems using extremely rigid rules are still being used. Static rule systems are slow to adapt, become quickly outdated, and have become increasingly predictable. These factors make it quite easy for criminals to hide their true intentions and mask transactions under the pretense of legitimacy. Likewise, with new rules and regulations put in place at an increasingly quicker rate, it is easy for an organization to fall out of compliance if it does not adhere to these latest laws. All this means increased costs through fines and updating of legacy systems.

Solutions to the problem

Fortunately, solutions do exist for these modern-day issues. For instance, AI-driven transaction monitoring enables organizations to stay ahead of the curve and always be compliant with new laws, while simultaneously improving customer experience. These systems have the capability to learn ‘on the job’ through continuous monitoring, inspections, and analytics – they actually get smarter. This means that now, criminal transactions can be identified more frequently and accurately as the system will have recognized the signatures used before and intercepted the transaction as suspicious. 

Internally, these new systems allow for a decrease in false positives and enable the compliance team to access real-time data involving legitimate behavior that is always changing. This further means that the systems are more cost-effective since manual reviews of false positives are eliminated. They also allow the compliance staff to focus more on the right investigations, thus creating an optimal AML workforce, unburdened by the constant manual reviews that hindered them in the past.

How ComplyRadar can help

ComplyRadar helps you address AML transaction monitoring requirements by automatically identifying suspicious behaviour in real-time or on a scheduled basis while minimising false positives. It monitors transactions related to individuals, accounts, and entities to detect suspicious activity quickly and effectively, through a fully audited process to inspect and act on flagged transactions. Contact us to learn how ComplyRadar enables you to fulfil your AML obligations whilst nurturing your genuine customers. It’s all about positive customer experience!