What is Transaction Monitoring ?
Transaction Monitoring is a key process in Anti-Money Laundering (AML) used by banks and financial
institutions to detect and prevent suspicious or any illegal financial activities, such as:
Money laundering
Terrorist financing
Fraud
Sanctions violations
✅ What Happens in Transaction Monitoring?
1. Tracking Transactions:
All customer transactions (deposits, withdrawals, transfers, etc.) are monitored in real-time or on a
scheduled basis.
2. Rules & Thresholds:
Predefined rules are applied. For example:
Transactions above ₹10 lakhs (or $10,000)
Rapid movement of funds
Unusual international transfers
Transactions inconsistent with the customer's profile
3. Generating Alerts:
If any transaction looks suspicious based on rules, an alert is generated.
4. Review by Analysts:
Analysts investigate the alert to decide if it's:
False positive (normal activity)
Suspicious (needs escalation)
5. Filing STRs (Suspicious Transaction Reports):
If confirmed, the case is reported to regulatory authorities like FIU-IND (India) or FinCEN (USA).
🔍 Why is Transaction Monitoring Important?
Helps detect financial crime
Protects financial institutions from regulatory fines
Ensures compliance with AML laws
Maintains the integrity of the financial system
