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The Bank Security Act (BSA) is at the heart of any conversation about anti-money laundering (AML) compliance, and strict requirements in transaction monitoring are baked right into that legislation.
These transaction monitoring requirements are designed for multiple purposes:
- To keep companies accountable to regulators
- To track and identify red-flag customer behaviors
- And to assist in escalating potential issues to the proper authorities
Long-story short, these financial transaction monitoring and reporting processes are hugely important in their own right — and a comprehensive understanding of how they work and what’s required are crucial elements of an effective compliance program.
What is AML transaction monitoring?
Anyone with an AML compliance program already in place is likely (hopefully!) familiar with transaction monitoring. But for everyone else — what is transaction monitoring?
Transaction monitoring is a tenet of the BSA that requires financial institutions to monitor customer activity closely, and to file reports when certain types of transactions take place. It aims to deter financial crimes like money-laundering, which are not only illegal in their own right but frequently connected to global issues like human trafficking, terrorism, and organized crime.
What goes into the transaction monitoring process?
To accomplish this goal, companies utilize both automated and manual processes to stay on top of the sheer volume of transactions. The automated monitoring processes often rely on highly sophisticated technology that incorporates artificial intelligence (AI) and machine learning to detect suspicious activity.
It works like this: the software combs through daily or sometimes real-time transactions like:
- Cash deposits
- Wire transfers
- And ACH activity
It then compares that data with an analysis based on a combination of a customer’s historical behavior and their account profile. (Essentially, how they’ve acted in the past and what their behavior should be now and in the future, based on that customer’s occupation or typical business operations.)
This process produces a “whole picture” analysis of any given customer’s profile, risk levels, and predicted future activity, and can even generate automatic reports or alerts in the event that suspicious activity is detected. Voilà! There you have a typical transaction monitoring process.
How does transaction monitoring fit into a bigger AML compliance program?
Naturally, compliance transaction monitoring is only one piece of the greater AML compliance program puzzle — and a piece that comes into play fairly late in the process, at that. An effective AML compliance training program will educate your employees on a range of topics like the ones below, which appear in Ethena’s AML course:
- Anti-money laundering foundations
- Financial crime explainer
- Definitions of key terms like money-service businesses (MSBs)
- The three stages of money laundering from the criminal perspective
- The five pillars of AML
- The AML legal landscape, which explores the BSA, USA PATRIOT Act, etc.
- Know Your Customer (KYC) variations — CIP, CDD, and EDD
We delve into the transaction monitoring process and reporting only after all of that is covered — it’s really the capstone. (And just to zoom out even further, it’s worth noting that an effective AML compliance program is only one piece of being truly AML-compliant. Which only drives home just how important each of these elements is.)
3 reasons why you need AML compliance training
A transaction-monitoring program is a great start, but it’s just a piece of the pie. To keep your workforce in alignment with the relevant regulations, AML compliance training is key. After all, what’s the point of monitoring suspicious customer transactions without the proper training on what to look for, how to handle it, and how to prevent issues going forward?
But in case that isn’t compelling enough, here are three additional reasons to institute AML compliance training in conjunction with a transaction-monitoring program.
1. It’s the law
Regulators are notoriously vague on the specifics, but AML compliance training is a literal legal requirement for financial institutions — a category that includes a broader swath of companies and industries than you might think.
Your company might be a money-service business (MSB), which qualifies as a financial institution. Typically, an MSB is a company that serves:
- Individuals (even those without bank accounts) who need to cash checks
- Individuals that need to transmit or receive money (often internationally)
- Individuals who need to purchase products like money orders or traveler’s checks
(Curious whether your company makes the cut? You can publicly access the full list of registered MSBs to see whether a given company is registered with FinCEN.)
2. An absent AML program could limit business opportunities
Anti-money laundering legislation is constantly evolving, so some companies go above and beyond to stay ahead of any changes. These proactive businesses set the bar high, often expecting their partners and counterparties to meet the same AML standards they adhere to — including instituting and maintaining a robust AML program. So even if your company isn’t currently registered as an MSB, if it does business with corporations that are, the lack of an AML program could still hold you back.
3. When it comes to AML compliance, negligence is just plain expensive
If you’ve been staying up-to-date with the news, you’ve likely noticed that fines for AML violations are at an all-time high. For the past few years, they’ve consistently topped $5 billion annually and skyrocketed to a whopping $4.17 billion in 2022.
The message from regulators is clear. Make AML compliance training a priority, or be prepared to face the consequences, such as:
- Steep Fines
- Criminal prosecution for individuals
- Penalties for the company at large
What makes Ethena’s AML training stand out?
Now that you’re on board with instituting AML training at your own workplace, you’re probably wondering what makes ours so special. And lucky for both of us, we’re always happy to share.
Clear, cringe-free content that gets straight to the point
Let’s just be honest: AML can be a pretty dry topic. Traditionally, AML training is mere check-the-box training that’s caused the eyes of more than one employee to glaze over in a combination of boredom and confusion.
But our best-in-class content is different, and we have the 1 million positive reviews to prove it. Our content refuses to get mired in legal jargon or tired scenarios irrelevant to the modern world.
We use clear, conversational language broken up with compelling multimedia and racially- and culturally-diverse scenarios to check learner comprehension in a manner that aligns with your in-house DEI goals.
Necessary documentation at your fingertips
Did you know that in the event of an audit or investigation, you might be asked to provide documentation of what training a given employee has completed and when they completed it?
Well, it’s okay if you weren’t aware of that because our legal and subject matter experts are on it. They had our engineering team create a function within Ethena’s platform that takes a snapshot of the precise training completed by your team members, along with dates. Everything you need is right at your fingertips.
A thoughtful admin experience that makes your job easier, not harder
Learners (our term for your employees) are always top-of-mind for us. But we also prioritize the administrator’s experience (that’s you!). As much as we’re sure you love chasing down employees and spending multiple hours a week manually assigning training, that’s all out the door with Ethena.
Our HRIS software integrations give you your time back with automatic Slack or email reminders that can be scheduled individually or in bulk with just the click of a button.
So what do you think? If you’re still on the fence, let’s talk! Someone on our team would be happy to walk you through any lingering questions or concerns. Or if you’d rather preview our AML training first, request a sample today and see us in action yourself.