Transaction Monitoring System Validation

In recent years on going testing and model validation compliance has seen increased focus and scrutiny from global regulators.

Transaction monitoring system validation. Accordingly validation services would include the following procedures as applicable. Identification of the types of customers products and services that are included within. Aml models include transaction monitoring software vendor products large homegrown transaction monitoring systems customer risk rating models if with a quantitative scoring component and alert risk scoring models again if with a quantitative scoring component. The evaluation of.

Validation services include testing the accuracy and integrity of the transaction monitoring system to determine whether the application is functioning as intended. This means that the setup and overhead costs are high when organizations recognize that certain crucial elements are not adequately documented or dispersed across the organization making the start of a full scale validation. Calibration testing of parameters should be part of a model validation. A transaction monitoring product in its most basic form is not a model.

In june 2016 the new york department of financial services dfs highlighted shortcomings in the transaction monitoring and filtering programmes within financial institutions. Transaction monitoring tm systems that leverage appropriately designed scenarios and thresholds can improve a financial institution s capability to detect suspicious activity quickly and more effectively. A transaction monitoring system is a first time exercise. Meeting regulatory requirements by implementing a systematic tm system validation methodology.

Transaction monitoring by compliancewise provides predefined workflows including obligated steps that allow institutions to identify unusual transactions properly and in good time. Additionally it provides the possibility to upload and store all relevant documentation within the system allowing easy access to any information needed for. For many financial institutes the current validation of e g. A transaction monitoring system sometimes referred to as a manual transaction monitoring system typically targets specific types of transactions e g those involving large amounts of cash those to or from foreign geographies and includes a manual review of various reports generated by the bank s mis or vendor systems in order to identify.

While a model validation is required periodically a data integrity review may be warranted more frequently at least annually particularly if an institution has new transaction codes a conversion of integrated systems or mergers and acquisitions.