Transaction monitoring program

Description

Transaction monitoring is the operational engine of every modern AML / CTF regime: the obligation to look at customer activity in flight and after the fact, recognize the patterns that statutes and FATF guidance have identified as red flags (structuring, rapid movement of funds, geographic risk, transactions inconsistent with the customer profile), and escalate the suspicious cases through the regulatory reporting channels (SARs in the US, STRs in most other jurisdictions). The operational pieces are the rules engine and its tuning (typed rules, statistical models, or a hybrid; the tuning lives or dies on the false-positive rate the investigation team can actually work), the alert investigation workflow with documented dispositions, the SAR / STR drafting and filing path that satisfies form requirements without leaking suspicions outside the institution, and the model-risk-management posture examiners now expect for monitoring rules that use machine learning. Supervisors expect monitoring to be risk-based and tuned to the institution's specific risk profile; off-the-shelf rule sets that have not been calibrated against actual customer behavior are a recurring examination finding. Underreporting is the headline enforcement risk; defensive over-reporting is its own problem because it dilutes the value of the SAR pipeline to law enforcement.

Applicability

Applies when: sector is fintech.

How predicates are evaluated

Required by (4 regulations)

• US MTL

  BSA suspicious-activity-monitoring at the MSB level; SAR filing within 30 days of detection; risk-based monitoring with structured-transaction detection (sub-$10K splits to evade CTR threshold).

  Bank Secrecy Act, 31 U.S.C. §§5311-5336; 31 CFR Chapter X; per-state Money Transmitter Acts

• EU EMD2

  EU AML transaction-monitoring obligations under 2024 AML Regulation; Member State FIU STR filing.

  Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009

• EU MiCA

  CASP transaction monitoring including Travel Rule data validation; market-abuse monitoring under MiCA Title VI Articles 86-92.

  Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023

• UK FCA Payments

  MLRs 2017 + JMLSG ongoing-monitoring expectations; SAR filing to NCA; FCA examination focus on monitoring quality and filing volume.

  Payment Services Regulations 2017 (SI 2017/752); Electronic Money Regulations 2011 (SI 2011/99); FCA Handbook

Fulfilled by (3)

• comply-advantage · full · medium effort · $$
• sumsub · partial · medium effort · $$
• In-house build · high effort

ClearLaunch does not accept payment from vendors. Methodology.

Evidence formats

• monitoring rules library
• alert investigation logs
• SAR filing records