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Treasury

Transaction monitoring: Poor data highlights need to invest in tech

In the first part of Euromoney’s focus on transaction monitoring, we look at how compliance costs hinder funding for effective AML detection.

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Transaction monitoring is not working as it should, according to the Centre for Financial Crime and Security Studies (CFCS), which highlights cost as a main concern.

Matthew Redhead, associate fellow at the CFCS – part of think tank the Royal United Services Institute (RUSI) – spoke at the Sibos conference in October about the many additional expenses associated with monitoring technology, such as technical and vendor support, that can create friction with chief financial officers.

One of the biggest costs involved is getting organizational data in order. Many financial institutions struggle with the quality and the quantity of data, some of which has been built up over decades.

“To effectively monitor transactional data, the organization must understand it, determine the risk for each type of transaction involved and then ensure it is clean for effective detection,” says Ted Sausen, director and anti-money laundering (AML) subject matter expert at Nice Actimize.

Since institutions must comply with regulatory mandates, some are left with no option but to undertake monitoring with inefficient operational processes.

“It is a vicious circle where compliance is seen as a cost centre, which prevents proper funding for implementing effective technologies and processes to deal with transaction monitoring requirements,” says Jose Caldera, chief product officer at Acuant.

“The


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