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.
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
Effective transaction screening helps with the anti-money laundering process.
What are the benefits of transaction screening?
Transaction screening carries many benefits for financial institutions. The most notable include immediately preventing criminal transactions in order to abide by regulations, reducing the number of transaction monitoring alerts, and improving compliance and risk management. As well as this, transaction screening can improve trust and enhance customer loyalty if implemented effectively.
How does transaction screening differ to 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 transaction monitoring refers to identifying suspicious patterns in transactions over time.
