How firms can navigate transaction monitoring during a recession


During a recession, it is common for everything to get harder. For compliance teams, facing lower resources with increased crime is tough.

With the modern-day world of finance conducting its business primarily digitally, the importance of managing transaction monitoring correctly during a recession has become more important than ever, claims Sentinels.

During a period of a recession, compliance teams are likely to find pressure on their department increase even further as occurrences of bribery, corruption, fraud, and other serious offenses are likely to rise.

According to Sentinels, criminals will leverage the opportunities created by a renewed global financial crisis such as a recession to make their attack. As anti-corruption watchdog Transparency International put it, ‘corruption often thrives in a time of crisis… when institutions and oversight are weak’.

Often during times of economic downturn, many of the unique challenges and sector-specific risks tend to climb. This can often have an impact on criminal typologies as greater incentives and active pressure sway otherwise lawful individuals to engage in financial crime.

Sentinels explained, “When it comes to transaction monitoring in a recession, however, the compliance function becomes even more important because of the rapid speed at which the market moves. Organisations must be able to respond quickly and react to these changes in order to stay ahead of nefarious individuals and market pressures.

“It may be tempting for leaders to contemplate slimming down their compliance function in a bid to cut costs, but compliance obligations don’t simply disappear because there’s a recession. Instead, leaders should be looking to do the opposite by supporting and optimizing their compliance function. This should be one of their main priorities for effective transaction monitoring in a recession.”

It’s often now easier than ever for consumers to access a wide range of financial products, from bank accounts and credit cards to loans and insurance products—thousands are available almost immediately at our fingertips.

While this digital transformation has been a positive, it has also led to a massive increase in financial crime as there are more ways for criminals to cause exploitation. In response, many organisations have dramatically increased the size and capabilities of their AML and compliance functions.

Sentinels said, “Keeping ahead of the latest threats from criminal actors isn’t just about pouring more money into your compliance function, though. Organisational leaders need to be more tactful and ensure that any investments into compliance efforts are going to the right place and, indeed, to the right technology”.

Through real-time transaction monitoring, compliance teams can benefit in three key areas. Firstly, they can more easily identify suspicious activity. Automated transaction monitoring tools can be quickly set up and deployed with custom rules to identify activities that fall outside of expected or permitted profile and network patterns.

There is also higher accuracy over time. “Transaction monitoring tools get better with time as the artificial intelligence and machine learning models that power them help the system to learn and fine-tune itself, without the need for third-party support,” said Sentinels.

Companies can also embrace automation. “Automation is what powers the best transaction monitoring tools. It provides compliance teams with a high-level overview of their customers’ profiles, flags suspicious activity, and streamlines reporting. This delivers huge savings in both time and money compared to traditional monitoring processes and workflows.”

Read the full post here.

Sentinels recently expanded its leadership team with the appointment of Christian Roberts to the role of chief product officer.

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