ELEMENT of Compliance – Transaction Monitoring
Today’s Challenges
Transaction monitoring is an integral part of the AML procedures applied to combat financial crime. However, the explosive growth in transaction volume has exacerbated several challenges:
Growing numbers of false positives
are making investigations more time-consuming and cost intensive.
Rapid obsolescence of transaction monitoring rules
as criminals continuously adapt their behaviours.
Rising expectations to monitor
customer activity and report suspicious behaviour within a reasonable time frame.
Additionally, financial institutions are facing heightened regulatory scrutiny. Thus, an advanced approach is imperative to enhance continuous monitoring and improve regulatory compliance. Moreover, new models and scenarios need to be more rapidly developed, tested and deployed.
BlackSwan’s Approach
BlackSwan Technologies’ ELEMENT of Compliance is an industry-leading KYC/AML solution recognised by Chartis Research, combining conventional rule-based transaction monitoring with the latest sophisticated AI techniques. To account for the shortcomings of standard rule-based monitoring solutions, ELEMENT introduces relationship-based monitoring and behaviour-based monitoring. Relationship-based monitoring discovers complex networks of shell companies that support money laundering on a global scale, which are often difficult for conventional systems to detect. Plus, behaviour-based monitoring counters launderers’ efforts to remain undetected by rule-based scenarios in standard AML solutions.
The benefits above are achieved through a combination of AI technologies, including knowledge graphs and machine learning. With ELEMENT’s approach, financial institutions significantly reduce false positives while minimising regulatory risks and compliance costs.
Key Differentiators
Relationship-based monitoring
Detection of simple and complex networks of shell companies by using transaction and customer information, as well as data from open source intelligence and paid sources, to analyse transactional activities, UBOs, addresses, etc. via knowledge graph link analysis.
Automated entity segmentation/clustering
Categorisation of originators and beneficiaries (with or without KYC information) based on their profile, banking activities, and business type using machine/deep learning; and thereafter, score and monitor their risks.
Behaviour-based monitoring
Detection of suspicious activities by using pre-defined explainable and creatable features that are based on money laundering and terrorist financing behaviours, greatly reducing the false-positive alert ratio and decreasing the overall risk.
ELEMENT of Compliance’s Transaction Monitoring generates alerts based on a set of rules and scenarios defined by analysts.
Visualise and monitor transactions in real time, compare activities of peer groups and highlight outliers.
Additional Features
- Bespoke entity resolution
Compilation of all variations of an entity’s identifying information and accurate distinction of entities with similar identifying information using machine learning algorithms, dramatically reducing false positives. - Adaptable rule-based monitoring
Execution of rule-based scenarios, readily adjustable by the analyst team, incorporating knowledge graph technology to identify additional risks and linkages, improving the detection of true positives and reducing the number of false positive alerts. - Customer/Account segmentation/clustering
Segmentation of customers to run scenarios with more accurate thresholds based on the risk of client clusters, while using internal data (e.g., KYC information) as well as open source intelligence to improve segmentation accuracy, reducing false positive alerts. - Peer group analysis
Identification of bad actors hiding behind legitimate or semi-legitimate businesses through advanced analytics and segmentation, by comparing the activities of peer groups and highlighting outliers.
An Integrated Component in Financial Crime Compliance
Transaction Monitoring is a core component of BlackSwan Technology’s ELEMENT of Compliance™. The solution addresses the full range of capabilities to support and augment financial crime compliance, including:
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