Which Transaction Monitoring Software is Right for My Institution?

20 June 2018

Many banking professionals struggle with this question every year: is my transaction monitoring software adequate? 

For those banks chartered in New York, this question is even more daunting. As the New York Department of Financial Services (DFS) issued the rule (Part 504), Banking Division Transaction Monitoring (BSA/AML) and Filtering Program (OFAC) Requirements and Certifications, which requires banks to take ownership and accountability for their transaction monitoring (TM) and sanction screening tools and methodologies. In its announcement of the rule, the DFS said that it resulted from four years of investigations of transaction monitoring and filtering systems, during which the DFS identified serious program shortcomings attributable to lack of robust governance, oversight and accountability at senior levels of financial institutions. The rule is the first of its kind and begs the question, will this become the golden standard; will other regulating bodies follow suit?

Certainly, the DFS is not the only regulating body to scrutinize banks for their AML and Sanctions programs.  Countless fines and cease and desists have been issued by both the Federal Reserve (Fed) and Office of the Comptroller of the Currency (OCC), which have left banks scrambling to reassess the effectiveness of their programs. 

What is the best solution for your institution?  The answer is not one-size fits all, in fact, that is where banks run into issues.  A well designed and effective solution should meet the scale and size of your organization, as well cover the risks of your institution. Sometimes that can mean a home-grown solution verses a vendor solution; or sometimes that means customizing a vendor solution to better meet the needs of your organization.  Don’t be afraid of customization, embrace it, it may just prove to be the best money spent you’ve done in a year’s time.   

TM initiatives and systems are deficient from the outset – among the many issues, institutions may fail to incorporate lessons learned from past errors into their new TM programs in an appropriate or timely manner.  Remember the adage of a car getting you from point A to point B; well don’t get into a luxury sports car if you can’t afford the customization and maintenance.  Instead, find a vehicle that you can afford with all its bells and whistles, is reliable and dependable; it might just prove to be the best purchase you could make.  Same holds true for your AML program: don’t find yourself in a solution you cannot afford to customize and maintain; eventually it will need maintenance and customization and you need to be able to afford it. 

Axletree offers solutions that help organizations get through the pitfalls of implementation and customization of their Transaction Monitoring and Sanctions Screening systems. We bring on experienced personnel, in small sophisticated teams, to assist plan, identify, and implement reasonable and scalable solutions. Contact our team today to learn more.  

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