What is AML/CTF transaction screening?
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What is AML/CTF transaction screening?

Transaction screening or transaction monitoring software, sometimes known as transaction monitoring tools, are an essential part of the anti-money laundering and counter terrorism financing (AML/CTF) process for financial institutions and other AML/CTF-obligated entities, otherwise known as Designated Services.

What is Fraud transaction monitoring?

Not that dissimilar to AML/CTF transaction screening, fraud transaction monitoring is designed to detect and prevent fraudulent transactions and events across customer interactions lifecycle. Whether a financial institution customer updates their mobile phone number, does a purchase on their credit card or transfers money to someone else they know, a prudent financial institution would use a transaction monitoring software to either approve or decline such activity.

Why monitoring transactions is important?

For the purposes of AML/CTF transaction screening, it’s one of the fundamental ways designated service provider, such as financial institutions, can monitor customer transactions in real time, assessing the risk of individuals and non-individual entities and their transactions.

A failure to monitor transactions and to comply with regulatory requirements can lead to significant fines, court proceedings, reputational damage, loss of customers and ultimately a loss of operating licence.

With over 7% of population experiencing fraud on their credit cards alone, monitoring transactions to detect and prevent fraudulent events across all channels is important to both the bottom line and customer experience. In fact, 1 in 5 consumers will terminate their banking relationship with an institution, following a fraud on their account.

Transaction monitoring software is needed more than ever

The need for transaction monitoring software is only growing across the Australia and New Zealand region. Earlier this year, the Australian Transaction Reports and Analysis Centre (AUSTRAC), announced it would commence roll out of ‘Tranche 2.’ Tranche 2 is Australia’s interpretation of the global Financial Action Task Force Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) uplift recommendations.

The roll out of Tranche 2, slated for 2022, will see professional services firms such as lawyers, accountants, and real estate professionals fall under the jurisdiction of AUSTRAC. This will enable AUSTRAC to enforce the AML/CTF measures already mandatory across other designated services across professional services industry.

This means an even greater number of people, professions, and businesses will require transaction monitoring tools to monitor, detect, and act upon suspicious transactions. These organisations will now have to make substantial changes to their technology stacks to ensure they can identify, manage, and report potential financial crimes to remain compliant.

In New Zealand, transaction monitoring software is also an essential asset for banks and financial institutions in their AML/CTF compliance and activities. New Zealand’s Financial Market Authority (FMA) took an overall much stricter approach to non-compliance in its most recent reporting period — a clear signal to businesses that they must improve their AML/CTF compliance. Without transaction monitoring software, this is a near impossible task.

Indeed, the FMA issued 27 private warnings, three public warnings, and its first ever court proceedings in New Zealand in its most recent reporting period. This is compared to just 17 private warnings and one public warning in the previous reporting period.

Similarly, when it comes to fraud, consumers demand protection from their financial institutions and regulators are following on with enforcement actions.

How does AML transaction screening works?

AML/CTF compliance includes a transaction screening component of the program. Transaction screening is designed to identify, mitigate and manage AML/CTF risk.

The program requires designated services to include transaction monitoring, based on the organisational risk assessment and includes monitoring, understanding and reporting of:

  • unusually large transactions
  • complex transactions
  • unexpected patterns of transactions that don’t seem to have a legitimate purpose

Regulators stipulate that appropriate resources and priority to analysing and actioning alerts raised by transaction monitoring must be allocated. This means that while manual screening is acceptable, to achieve accurate and compliant reporting, automation may be required.

AML/CTF transaction screening software uses sophisticated transaction typologies to identify suspicious behaviour and financial crime. It detects anomalies in customer behavioural patterns through ongoing monitoring.

If a designated service provider, such as a financial institution, uses an industry recognised and trusted transaction monitoring software like GBG’s Predator, it gives regulators confidence in the thoroughness of detection, audit trails and the rigour of compliance.

How does fraud transaction monitoring work?

We’ve all been in a situation where you just arrive to your holiday destination, make your first holiday purchase, only for the transaction to be declined by your bank. This is an example of outdated fraud transaction monitoring that leaves customers dissatisfied with their bank.

Modern day tools would already know that you are going on holidays or are busy shopping. If anything, your bank would send you an SMS to confirm that you are away from home or spending more than usual, but they will not stop you. At the same time, if someone were to take your wallet and help themselves to your savings, a well-configured transaction monitoring software would pick up unauthorised transactions and block them in real time.

The same genuine and fraudulent typologies are analysed across all products and banking channels, including internet and mobile banking, branch withdrawals, cheques and open banking to name a few.

Not dissimilar to AML/CTF transaction screening, fraud monitoring software detects anomalies in customer behavioural patterns through ongoing monitoring and use of machine learning.

If a financial institution uses an industry recognised and trusted transaction monitoring software like GBG’s Predator, it gives them ability to minimise fraud losses, satisfy regulatory requirements and most importantly, give their customers confidence in their relationship.

Reducing the need for human intervention and eliminating the possibility of human error, transaction monitoring tools can enable real-time and automated alert responses, which increase accuracy and reduces false positives.

Award-winning Transaction Fraud Management

GBG’s products are trusted by thousands of world’s leading companies.

GBG’s flagship transaction monitoring tool, Predator, is an award-winning platform that encompasses transaction fraud and compliance risk management. It protects both a business and its end customers by monitoring customer transactions across all channels. GBG Predator mitigates the ongoing threats posed by fraud and financial crime.

Some of GBG Predator’s unique features include:

  • GBG Predator allows banks and financial institutions to mitigate transactional fraud and compliance risk.
  • Both financial transactions and non-financial events are consumed by Predator and used to analyse customer behaviours and alert to unusual activity.
  • Integration is fast and easy using a highly flexible data schema, configured to organisations’ specific data complexities.
  • Full or partial automation for detection of anomalous behaviours during transactions.
  • Importantly, GBG Predator, with or without Machine Learning component, provides all the advanced detection and protection to satisfy internal and external requirement whilst maintaining a core focus of supporting a frictionless customer journey.

Whether you are a professional services firm that needs to implement transaction monitoring software to adhere to new AUSTRAC regulations for your industry, or an established financial institution looking to improve your transaction monitoring tools, GBG is the right solution for you. Contact our sales team today to learn more about GBG Predator.

To read more about GBG Predator, click here.

To download GBG’s free guide to advanced fraud detection in cashless transaction technology, click here.


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