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FACTORS THAT CAN CONTRIBUTE TO AN INEFFECTIVE TRANSACTION MONITORING SYSTEM

By Ehi Eric Esoimeme, Managing Partner, Chief Trainer and Consultant at E-Four and AAF

Procedures for monitoring, detecting, and reporting suspicious activity should be effective. Banks are required to implement transaction monitoring procedures and file reports of suspicious activity with the Financial Intelligence Unit. Like other anti-money laundering filings, SARs play an important role in detecting possible criminal activity. Financial Intelligence Units and law enforcement agencies use SARs to investigate money laundering, terrorist financing, and other serious criminal activity.

Several factors can contribute to a Bank's ineffective transaction monitoring system. They include the following:

1. The bank’s transaction monitoring system contained account opening information and customer risk profiles that were frequently incomplete, inaccurate, and lacked sufficient analysis and validation, and because of the incomplete and inaccurate information, when the bank’s automated transaction monitoring system generates alerts on certain customers, analysts in the compliance department may not be able to determine effectively when a change in those customers’ activities should have resulted in a change to those customers’ risk ratings.

2. The anticipated account activity for some customers often does not match the actual transaction activity. This may result in the generation of an unmanageable number of alerts that includes large numbers of false positives.

3. The AML monitoring system failed to capture critical information about foreign currency-denominated wires, such as sender and recipient information and the country of origin and destination.

4. Manipulation of system output through use of alert caps on both profiling and query detection methods that could potentially result in missed suspicious activity reports and potential regulatory action resulting in fines, consent order, and significant historical review of transactions.

5. Where the Bank lacks the staff needed to review the alerts that were generated relating to potentially suspicious activity. This may result in the Firm’s failure to adequately review certain cases of potentially suspicious activity triggered by its automated monitoring system and to make reasonable determinations whether or not to file suspicious activity reports (SARs). Inadequate staffing may lead to a significant backlog of alerts and decrease Bank ability to file SARs in a timely manner.

6. Failure to adequately tailor the parameters and thresholds of the alerts generated by the system to match the high-risk activities it sought to identify and control.

7. Failure to validate or independently test the system’s parameters and thresholds to reduce the number of false positive alerts the system generated.

The Certification Courses on Financial Crime Compliance by E-Four and AAF will discuss measures that are critical to preventing money laundering. These courses include:

• CFC - Certified in Financial Crimes and Fraud Prevention ™

• CAMC- Certified Anti-Money Laundering Consultant ™

• CDDP - Certified Due Diligence Professional ™

• CAMA - Certified Anti-Money Laundering Auditor ®

• CCO - Certified Compliance Officer ®

• CMRA - Certified Money Laundering Risk Consultant ®

• ChFI - Chartered Fraud Investigator ®

Benefits

• Successful completion of a GAFM ™ course makes you a Certified Professional in the relevant subject matter.

• You can use the assigned designation on your business card and resume

• Up to 22 months membership to the GAFM ™ professional body

• Access to the GAFM ™ network and body of information online

• Gold Embossed Certificate with your name and designation as MGAFM (Member of the Global Academy of Finance and Management)

• Free access to the E-Four and AAF digital financial newspaper for 1 year. This newspaper will be released 2 times in a year. First part will be released, June 2022.

Training Sessions

Each day will have two sessions. Session 1 will start from 10am and end at 12pm with a 1 hour break from 12pm to 1pm while Session 2 will begin from 1pm and end at 4pm,

Training Fee

The Training Fee for each of the Training Programmes is 1200 $US. There are discounts for group registration.

For more details, please find attached our Training Calendar for January and February, 2022.

Get course brochures at: https://efour-aaf.com/certified-training-courses-on-financial-crime-compliance.html

Kindly let us know which of the training programmes that you are interested in.  

IMPLEMenting compliance enhancements to continuously improve AML AND TRANSACTION monitoring programs

By Ehi Eric Esoimeme, Managing Partner, Consultant and Trainer at E-Four and AAF

Our banking system’s vulnerability to money laundering is once again a focal point of debate in the wake of the Financial Conduct Authority's report into HSBC that cites examples of poor controls, including failing to spot suspicious activity on the account of a construction director who also played a leading role in a criminal gang trying to steal millions of pounds by setting up fake companies.

For Financial institutions to adequately monitor and detect suspicious and prohibited activity, it is important that they implement compliance enhancements to continuously improve their AML and transaction monitoring programs through significant investments in AML staffing and technology, including:

• Enhanced Surveillance System: Financial institutions should upgrade their AML surveillance monitoring system across all of its separate business lines to an upgraded system. The new system should be able to provide enhanced grouping and alert features, thus strengthening the ability to monitor transactions between related accounts.

• Accountability: Financial institutions should enhance their oversight of AML monitoring and also implement back-testing protocols, which help enhance the quality of the alerts and reduce false positives.

• Alert Handling, Documentation, and Inventory Tracking: Financial institutions should enhance their minimum standards for alert handling, documentation and tracking. The enhancements should include, among other things, detailed written instructions on how to handle alerts, document a review, and escalate an alert through the proper personnel channels.

• Enhanced Training and Minimum Standards for Key AML Monitoring Staff: In order to enhance the quality of alert handling, financial institutions should set minimum experience requirements for its AML monitoring staff and provide them extensive training. E-Four and AAF is an Accredited Training Provider for the Global Academy of Finance and Management (GAFM) and the American Academy of Project Management (AAPM) certification programs. With this partnership, E-Four and AAF offers various GAFM® and AAPM ® certifications in conjunction with its existing/relevant training programmes and courses. GAFM® and AAPM ® courses are TUV Accredited, ISO 9001 Accredited, ISO 29990 Accredited, AABFS Accredited, CHEA Standards, EU Compliant Level VII, and ACBSP Articulation Awarded Credential. Currently, E-Four and AAF offers the following GAFM® and AAPM ® certifications:

• CFC Certified in Financial Crimes and Fraud Prevention™

• CAMC Certified Anti-Money Laundering Consultant ®

• CDDP – Certified Due Diligence Professional

• CAMA – Certified Anti-Money Laundering Auditor™

• CCO Certified Compliance Officer ™

• CMRA Certified Money Laundering Risk Analyst ®

• ChFI Chartered Fraud Investigator ™

E-Four and AAF also offers the following training courses with the Global Academy of Finance and Management (GAFM):

1. Identifying and reducing the risks associated with senior political figures, often referred to as “politically exposed persons” (PEP).

2. Recognizing and mitigating the risks associated with cash-intensive businesses and entities.

3. Managing the risks associated with transactions involving domestic and foreign business entities.

4. Managing the potential risks associated with relationships with third-party entities that process payments for telemarketers, online businesses, and other merchants (collectively "merchants").

5. Managing the risks associated with transactions involving accounts held by nonresident aliens (NRA) and foreign individuals

6. Recognizing and mitigating the risks associated with Money services businesses (MSB).

7. Managing the risks associated with accounts of nongovernmental organizations (NGO) and charities

8. Managing the risks associated with offering domestic correspondent account relationships

9. Managing the risks associated with foreign correspondent banking

10. Managing the risks associated with private banking relationships for both domestic and international customers.

11. Managing the risks associated with payable through accounts (PTA)

12. Managing the risks associated with trust and asset management services

13. Managing the risks associated with trade finance activities

14. Recognizing and mitigating the risks associated with professional service provider relationships

15. Managing the risks associated with privately owned automated teller machines (ATM) and Independent Sales Organization (ISO) relationships

16. Managing the risks associated with prepaid access products

17. Managing the risks associated with electronic banking (e-banking) customers, including Remote Deposit Capture (RDC) activity

Upon successful completion of any of this training programmes, the participants will receive a Certificate of Participation with assigned CDP Points from the Global Academy of Finance and Management (GAFM).

• Quality Assurance: Financial institutions should assess the quality of the AML monitoring analysts’ work and substantive accuracy of the disposition of the alert under their quality assurance system. Findings should be reported monthly to designated senior officers.