Knowledge base

Transaction Monitoring

In today’s fast-paced digital world, how do you protect your company from financial fraud?

With the rise of online banking, and digital payment systems, ensuring the security and integrity of transactions has become a paramount concern. To address this challenge, financial institutions monitor transactions, which helps detect and prevent fraudulent activities, money laundering, and other illicit activities.

What is Transaction Monitoring?

Transaction monitoring is the process of analysing financial transactions to identify and mitigate risks associated with money laundering, fraud, terrorist financing, and other illicit activities. It involves tracking and analysing various transactional data points, including customer information, transaction amounts, patterns, and trends, to detect suspicious activities and ensure compliance with regulatory standards.

The primary objective of transaction monitoring is to monitor and analyse transactions in real-time to identify any unusual patterns or behaviours that may indicate potential risks. This can include large or frequent transactions, transactions involving high-risk countries or individuals, sudden changes in transactional behaviour, or transactions that deviate from established norms or patterns.

How do companies monitor transactions?

For an organisation, the type and steps involved in transaction monitoring vary according to factors such as

  • Risk value of individual/company
  • Industry of the organisation
  • Regulatory requirements
  • Geographic location

Transaction monitoring systems flag various suspicious behaviours that indicate potential fraud or illicit activities, such as

1. Unusually large transactions

Transactions that significantly exceed a customer’s typical spending patterns or transaction amounts may be flagged for further investigation.

2. High-risk countries

Transactions originating from or involving high-risk countries or locations known for money laundering, terrorism financing, or other illicit activities tend to be flagged by monitoring systems.

3. Unusual transaction patterns

Multiple transactions occurring within a short period, especially if they involve different accounts or locations, often indicate potential money laundering or fraudulent activity.

4. Transaction split

Structuring involves splitting a large transaction into multiple smaller transactions to evade detection. Such fragmented transactions also raise red flags.

5. Identity theft

Transactions linked to identity theft, such as using stolen credit card information or impersonating legitimate customers, are often flagged as suspicious.

6. Blacklisted entities

Transactions involving individuals or entities on watchlists or blacklists maintained by regulatory authorities or internal risk databases are typically flagged for investigation.

Who needs transaction monitoring?

All organisations that deal with money and are governed by KYC/AML regulations need to closely monitor transactional activity to flag suspicious behaviours. A few types of companies include:  

  1. Financial institutions like banks, fintechs, and credit unions
  2. Payment service providers such as payment gateways and online payment platforms
  3. Money service companies such as exchange bureaus and remittance services
  4. Investment firms
  5. Cryptocurrency and blockchain companies
  6. Insurance firms
  7. Real estate companies

How can uqudo’s transaction monitoring protect your company from fraud?

uqudo’s state-of-the-art transaction monitoring system has been designed to provide comprehensive security and compliance to all our customers. Using advanced technologies such as AI and machine learning, our identity platform can help identify and mitigate the chances of your company’s association with financial fraudsters.


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