Transaction Monitoring via KYT Solutions Magnifies KYC Solutions. Here’s How!

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You will definitely not disagree with me if I say that in this modern age of tech-oriented world where everything is prone towards digitization and fintech is evolving, fraudulent activities are also progressing. Due to the innovation in artificial intelligence and cognitive technology, hackers are capable enough to come up with sophisticated tactics and carry out fraudulent activities in the best possible manner.

This boils down to the reality check that it’s high time for enterprises and financial institutions to enhance their security protocols to fight a tremendous battle against criminals. Only the acquisition of KYC is not enough in this age to deter counterfeits. more enhanced solutions must be attained by enterprises for the detection as well as prevention of illegal money transfers.

Why is KYC Not Sufficient?

Financial infrastructures mandatorily have to incorporate KYC solutions to fulfill the requirements of customers and agree upon the global regulations. There exist few countries that have created a proper set of such rules and regulations that helps to develop a transparent relationship between customers and businesses.

Most of the infrastructures are still relying on manual processes in this present age. This means that there is no ongoing process or follow up for the assurance of customer’s authenticity in the long run every time KYC and due diligence are performed on the customer. There also exist such organizations that keep the record of their potential customers in a paper form. This way, financial institutions such as banks can not effectively conduct due diligence without compromising customer’s experience.

Thanks to the innovative artificial intelligence algorithms that have made the KYC solution more robust, reliable, global, accurate, and effective. AI-powered KYC solutions result in onboarding customers in real-time and the acquisition of such solutions is mandatory for the enhancement of security protocols and to deter terrorist financing. But, only knowing your customers is not enough. In spite of knowing customers, knowing each and every single transaction is important for enterprises for the detection of money laundering and terrorist financing.

What is Transaction Monitoring?

A process by which financial infrastructures can effectively detect high-risk transactions and combat terrorist financing, as well as money laundering activities, is called transaction monitoring. This procedure takes into account the financial profile and the background of the end-user for the proper monitoring of potential risks. The incorporation of transaction monitoring enhances future transactional activities. Transaction monitoring generates Suspicious activity reports ( SARs) if it is done in real-time on the basis of actions of the user and that report is then sent to high regulatory authorities for the purpose of future investigations.

What is The Significance of Transaction Monitoring?

Below is the list of reasons that ensures the significance of transaction monitoring:

  • Transaction monitoring assists businesses to develop a splendid reputation in the eyes of regulatory authorities and financial partners by the maintenance of a comprehensive audit trail of encountering transactions.
  • Transaction monitoring can be carried out without full-time technical support as monitoring systems are becoming more effective and efficient with the passage of time.
  • Transaction monitoring helps in the detection of suspicious activities for example terrorist financing and money laundering. This also helps in the identification of loopholes within the financial system of an organization.
  • AML software for the purpose of transaction monitoring permits organizations to decrease the needless red flags by taking the nature of the transaction list into account in light of state of art regulations.

What is Know Your Transaction (KYT)?

Along with Know your customer (KYC), incorporation of Know your transaction(KYT) is something that must not be neglected at any cost as it plays a promising role in enhancing the KYC solutions.

A process that involves such mandatory checks that must be obtained for the verification of each and every single transaction done by the customers for the detection of financial crime for the enhancement of business operations is called Know your transaction (KYT). Incorporation of this solution is crucial in enterprises for the assurance of possessing relevant customer data related to transactions for the prevention of terrorist financing, money laundering, and other relevant fraudulent activities.  Identity verification solutions on the basis of Know your transaction(KYT) can permit businesses to verify transactions of their potential customers. This way, safe and secure transactions can be carried out in real-time with proper risk assessment without compromising the customer’s experience.

Here is the list of financial transactions that are effectively monitoring during the process of the KYT solution:

  • Remittance transfers
  • Trade-related transactions
  • Letter of Credit (LC) transactions
  • Transactions across the board
  • Cash-based payments
  • Transactions via credit cards
  • Transactions via debit cards

What is a Transaction Monitoring System (TMS)?

The incorporation of transaction monitoring systems (TMS) in financial infrastructures is crucial and is already being utilized among financial organizations that are developed on risk-based AML criteria. Businesses can enhance their operations with appropriate risk assessment and can effectively track as well as monitor transactions of their potential customers by evaluating the history of their credit cards and profiles.

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