Measures to detect suspicious activity are more necessary than ever. So today we will be talking about screening and monitoring in the context of fraud prevention.

What is the monitoring process?

The screening process consists of evaluating the risks associated with a person. That is, a risk analyst accesses a registry or database in order to identify threats associated with a particular user. Normally, this process is carried out during the registration of new clients, during the KYC verification, to find out if their intentions are legitimate or not.

Screening is the process of searching for information about a potential client to build their risk profile.

The goal of this process is to use potential hazards and threats to prevent potential outcomes. Therefore, it serves to identify potential risks ahead of time, allowing the consequences to be anticipated and measures to be taken.

Of course, screening is part of customer due diligence (CDD).

How does it work? 

The screening process is based on an evaluation that allows detecting the existing legal sanctions of potential users, their adverse media coverage and if there is a politically exposed person (PEP) involved.

The process of identity verification and registration of new clients requires an exhaustive contextualization of these potential users.

As part of this contextualization, it is necessary to carry out:

  • Assessment of sanctions. The sanction lists are collections of users, in which those people with pending accounts are registered. These are listings that are constantly updated with new names. They are very helpful when assessing risks.
  • PEP evaluation. PEPs or politically exposed persons are users who have held political or administrative positions (their family members and business associates are also considered PEPs). The PEP assessment is performed to identify these users and assign them the corresponding risks.

What is the monitoring process?

Monitoring is the automated process used by financial institutions to record customer transactions, detect suspicious movements and patterns, and review questionable transfers and transactions.

Monitoring is an automatic process that extracts patterns and sets alerts in real time.

Examples of activities to be supervised are money transfers, withdrawals and deposits, currency exchanges, credit extensions. In any case, any activity involving money should be monitored.

Financial services, insurance companies, legal professionals, etc. They use transaction monitoring software to detect anomalies in each deposit, transfer, etc.

To carry out a monitoring process, advanced software is needed that is responsible for sending information about customers at the time an irregularity is registered, taking into account customer data and even background information.

It’s especially good for financial companies, as they can check customer transactions for any type of illegal, dubious, or high-risk activity.

How does it work?

Monitoring is a demanding process that involves a lot of information, hence the need to automate it and delegate it to technology (it is not feasible manually).

Of course, the process varies depending on the entity, but it has great characteristics:

It begins by establishing red flags or danger alerts. Based on these guidelines, the monitoring software generates reports on client activities and the risk levels assigned to clients who performed those activities. From those results, the software is able to determine if there is a threat. Client screening, check sanction lists and block lists.

The monitoring software warns when one of these alerts is activated. Depending on the severity of the alarm, the software takes appropriate action, starting with account lockout.

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