Transaction Screening

What is transaction screening?

Transaction screening occurs as part of anti-money laundering and counter-financing of terrorism (AML/CFT) procedures. It refers to a financial institution being able to analyze individual transactions before they are approved.If the transaction appears excessively risky or perhaps as a result of illegal behavior, it may be stopped from occurring.Screening transactions is necessary for financial institutions to ensure they are adhering to regulations.

How does the transaction screening process work?

Although financial institutions will use a variety of tools and take slightly different approaches, all transaction screening follows a basic pattern:

• A transaction is created. For example, a customer is sending a payment out of their account.
• The transaction screening software processes the payment and decides whether or not it can proceed. If it passes screening, the customer’s payment reaches its destination. Otherwise, an alert is triggered and the payment is momentarily paused.
• If an alert has been created, an investigator looks into the payment. They either see that it was a false positive and allow the payment to proceed, or they suspend the payment and recommend further investigation.

Transactions that make it through the process after investigation may still be subject to ongoing monitoring. This is to ensure that the payment isn’t part of a larger case of suspicious activity.

How fast is transaction screening?

A transaction is screened extremely quickly. SymphonyAI’s transaction screening tools screen against PEP lists, sanctions screening lists, and other watchlists in as little as 40 milliseconds.

What is an example of suspicious activity in transaction screening?

There are many ways that a transaction can appear suspicious. These include but are not limited to:

• An unusually large transaction amount
• Transactions being sent out of the country to a sanctioned location
• A person sending or receiving the payment is subject to sanctions
• A transaction appears to be for illegal/illicit goods
• A payment that is out of the ordinary. E.g. a business account sending large sums to a personal account.
• A transaction that falls foul of the bank or financial institution’s current risk policies. This policy differs between each institution.

Effective transaction screening helps with the process of preventing money laundering. Just because a transaction is marked as suspicious, it doesn’t mean that it won’t be allowed to go ahead. Often, a bank may investigate the transaction and see that it is legitimate. In other cases, they may require further context (e.g. a large payment for a wedding).

What are the benefits of transaction screening?

Transaction screening carries many benefits for financial institutions. The most notable include:

• Abiding by laws and regulations, enhancing trust;
• Immediately preventing criminal transactions that seek to evade sanctions;
• Reducing the number of transaction monitoring alerts, improving productivity, and allowing teams to focus in other areas;
• Improving compliance and risk management with a coordinated process that effectively combats AML/CFT.

As well as offering the above benefits, transaction screening improves trust and can enhance customer loyalty if implemented effectively.

The challenges of transaction screening

Staying on top of transaction screening can be challenging, especially if a financial institution is working with unreliable or poor data, outdated systems and software, and overworked teams. Potential challenges include:

• Out-of-date data – if sanctions lists are not kept up to date with proper watchlist management, and data isn’t synced with regulatory updates, the result reduces the accuracy of the screening process. In a worst-case scenario, many illicit payments may proceed while genuine payments are flagged for further investigation.
• False positives cause a backlog – With poor screening software, many false positives may occur, creating a queue for teams to work through. This results in a decrease in bank efficiency.
• Unclear alerts – Sometimes an investigator may receive alerts that don’t go into enough detail in explaining why an alert has been triggered. This lack of context decreases productivity and increases time spent on interdicted payments that may be low risk.
• Slow screening times causing poor customer satisfaction – If a payment is in a processing queue, customers may becoming increasingly dissatisfied. This is even more the case considering fast payments are now commonplace in many countries around the world, meaning that customers also expect fast processing. With ISO 20022, even more payments will need to be processed, compounding potential problems.

By enacting modern transaction screening tools that keep up to date with regulatory changes and offer improved software, firms can significantly reduce potential challenges.

How does transaction screening differ to AML transaction monitoring?

Although both processes occur as part of robust anti-money laundering procedures, transaction screening refers to analyzing individual transactions for suspicious activity whereas AML transaction monitoring refers to identifying suspicious patterns in transactions over time.

Is transaction screening the same as payment screening?

Payment screening is a type of transaction screening, focusing on payments before processing.Transaction screening is a broader category, focusing on payments, cash deposits, withdrawals, and any other type of transaction that may occur.

SymphonyAI offers fast, efficient transaction screening

Available as part of NetReveal Sanctions Screening, transaction screening is a cloud-native solution that helps financial institutions guard against payments to sanctioned entities or high-risk individuals. Part of SymphonyAI’s end-to-end, anti-financial crime suite of solutions, screen against millions of watchlist entries in as little as 40 milliseconds. Minimize false positive alerts and simplyify regulatory reporting processes (FinCEN CTR and FinCEN SAR, etc.) with an automated, out-of-the-box narrative approach, it is fast, future-ready, and can be deployed and made operational quickly.With service-enabled regulatory updates as well as negative news and politically exposed persons (PEP) screening also included, it is a SWIFT compatible application that delivers enterprise-level security and compliance with industry standards and regulations. Deploy new watchlists enterprise-wide in as little as 15 minutes, keeping screening operations agile and always ready to adapt to change.Learn more about SymphonyAI NetReveal Sanctions Screening.

Discover SensaAI for Sanctions

SymphonyAI also offers SensaAI for Sanctions. Augment your existing detection solutions to dramatically enhance matching capabilities with gen AI and predictive AI that analyzes and structures previously unstructured text and significantly reduces false positives. The result is a real-time AI upgrade for screening with a seamless, streamlined process.Learn more about SensaAI for Sanctions.