Challenges Faced During the AML Transaction Monitoring

Challenges Faced During the AML Transaction Monitoring

AML transaction monitoring is the process of tracking all financial transactions to identify suspicious activities immediately. However, the process has some challenges that can make it difficult to manage with the AML transaction monitoring system. Read through the blog to know more about the challenges.

The rate of money laundering cases has increased in the past few years. It is nowhere expected to decline anytime soon. The creative, effective, innovative tact and activities have barged in all reinforced security grounds. The money launderers have understood how to crack open the security boundaries and are getting better at it gradually. The PEP-listed people also find new ways of committing fraud that the authorities stay unaware of.

Understanding AML Transaction Monitoring

The disturbing rise in cases has initiated the development of effective solutions along the way. Transaction monitoring is one of the usable AML solutions that instantly detect unusual activities in a business or financial institution. As per the Bank of Secrecy, all financial institutions and businesses should have transaction monitoring systems to track all transactions thoroughly. 


Fighting against money laundering cases is vital, but the timing makes all the difference. A financial breach cannot be stopped in between, or if speculated slightly before the activity, it takes time to reach the decision. AML transaction monitoring is the process of identifying money laundering cases in the early stage and combating them with time. Over the years, AML transaction monitoring has provided enough results to become one of the most reliable AML solutions. 


It is hard to believe that the AML solutions have zero challenges in the way. Here are some challenges faced by companies while combating money laundering cases. 

Challenges Faced in AML Transaction Monitoring Process

Moving forward with adapting and acquiring the transaction monitoring process, we should take a deep look at the challenges faced. 


  • False Positives:

    One of the most common and heard challenges of transaction monitoring is that the preset rules can sometimes be inaccurate. When the system is used, it shows many positives that might not even be true. This increases the workload of the AML compliance analyst. Finding the risks is easier than correcting and checking the potential risks to ensure accuracy. As per the studies, 90 out of 100 alerts could be false positives. It is an incredibly high percentage of doubt that an AML analyst can take. Also, these false positives create a broken system or backlogs that are then an added responsibility to cater to. 
  • Poor Data Hinders the AI:

    The power of AI is usually leveraged to operate transaction monitoring systems. Since it relies on a single source to operate, it collects multiple system data in a single location. AI is an important element of all the AML strategies that somehow overload the AI and hinder its working. The AI deployment requires preparing the data that calls for effective and efficient handling without rushing into the process. Similarly, the sign of corruption and organization and completion of data requires great attention. 
  • “One Size Fits All” Approach:

    A transaction monitoring system is a regulatory requirement for all businesses, companies, and financial institutions. With the understanding of the sudden shift, many businesses purchased the shelf systems and used them without any significant customizations. The preset rules are easy to apply in an institution and ensure customer regularity. However, many problems can arise since the rules are generalized and not set specifically to risk exposures. Such systems are inappropriate for all types of businesses and companies and can become a huge resource drain. 
  • Reporting:

    Organisations that implement AML transaction monitoring systems adhering to the anti money laundering compliance program aim at extracting useful information. The systems are supposed to be preset on the process of monitoring, managing, analyzing, and completing the transactions. The system is expected to determine which Data is important for your use and should be generated. The data should be reported and recorded in a way that suits your organization the most. This helps companies and financial institutions to acquire additional services.
  • Cost and Future Proofing:

    We all know how transaction monitoring systems are expensive and ask for maintenance. Added to this, not always does the software solution keep up with the face and vision of the firm. Although the regulations change over time and new guidelines are set in place, institutions and firms face these challenges. The software solutions should be flexible enough to accommodate any change needed. Processes like suspicious activity reporting and transaction monitoring require end-to-end future proofing, gradually becoming a challenge for companies and financial institutions.

How Does AML-TRACE Fit in the Picture?

AML-TRACE is one of the revolutionary software developed by Smart Infotech to control and eradicate money laundering cases. The software is put in place to analyze and implement the right strategies and alert the authorities in case of any unusual activity. The software helps organizations or businesses detect minute activities that could be a long-time reason for financial fraud. It stays abreast with the regulatory requirements.


Installing AML-TRACE in the workplace explains how unnoticeable activities can lead to huge fraud. People today are so powerful and tricky that they plan the whole scenario and dodge heavy transactions by making small unrecognizable transactions. 


It is hard for organizations or financial institutions to identify any of them without external help. So, the software can be the best option when it comes to completely waiving off the transaction gaps. 


AML-TRACE is designed to detect the tiniest discrepancies and gaps in the financial system to understand the cause and implement the resources to correct it. 


Get in touch with Smart Infotech to get a detailed understanding of the functioning of the software.