Beyond Alerts: Optimising Your Financial Crime Monitoring

Last month, I was again fortunate to host a roundtable dinner for a group of financial crime professionals in London on behalf of Jade ThirdEye.

I've worked in financial crime prevention roles for almost 25 years, yet seeing such commitment and enthusiasm in a room still blows me away. People who don't know each other well are coming together to network, learn from each other, and share their experiences, all with the goal of preventing, detecting, and disrupting financial crime. It's an absolute privilege to be part of the solution. 

Our latest event was entitled "Improving Effectiveness in Financial Crime Monitoring".  We discussed practical ways of managing monitoring systems, from "Where do I start?" to best governance and oversight practices.

Practical Ways of Managing Monitoring Systems

Managing monitoring systems effectively is crucial for any business looking to prevent financial crime and ensure compliance with regulations. A poorly managed system can lead to an overwhelming number of false positives, inefficient resource allocation, and even missed suspicious activity, leaving your organisation vulnerable.

The goal is not just to check the compliance box but to implement a system that helps detect and prevent financial crime without unnecessary noise.

Here are some key takeaways on best practices, governance, and oversight in monitoring systems.

Assessing Your Financial Risk

It might seem obvious, but assessing risk is still often a step that's not completed thoroughly.  

• In practice, think, "How can my business be used to commit financial crimes? Where are we susceptible?" and focus your resources on where you are most exposed.  

• Build your transaction monitoring rules around practical examples. If you have experienced financial crime, strip your case back to the data and consider what you could use in your monitoring.  

• Keep rules under review. If you are getting many poor-quality alerts or no alerts at all, consider turning rules off.  

• Don't overwhelm yourself (and your teams) with too many rules, looking for too many scenarios.   

• With watchlists, consider the lists that are relevant to your business and where you do business—don't monitor all international lists with hundreds of thousands of names "just in case" if you're a UK-based firm, for example.

Minimising the number of lists you're checking against will result in fewer matches, but also think—if you had a match against one of these lists, what would you do with the match? If the answer is "nothing," I suggest you stop screening against it!   

Having too many alerts is not only inefficient but also increases the risk of human error—"alert blindness" is real!

Balancing Governance and Adaptability

Balancing governance and adaptability is crucial in financial crime prevention, whether you're operating in Australia, New Zealand, or the UK.

Regulatory guidance, such as the FCA Financial Crime Guide for firms in the UK, highlights the importance of thorough testing, sign-off, and evidence of challenge compared to the ability to adapt quickly to emerging threats.

Whilst it's clearly important that your monitoring system allows you to react to new trends – having the ability to write, test and launch new rules in a timely manner is key to winning the "whack-a-mole" game of fighting financial crime, and so is the way you handle changes.

"Governance should enable, not hinder, responsiveness."

Your policies, processes, and training material need to be maintained alongside your rules, and it remains a priority to ensure that your own sign-off processes are followed. The FCA Guide cites maintaining records of decision-making and rationale for thresholds in its list of best practices, so don't skip these important tasks.

However, governance should enable, not hinder, responsiveness.  If your governance requires changes to be approved through a committee that only meets once a quarter, then you might consider introducing a fast-track route that can be invoked in high-risk or rapidly evolving scenarios.  It's essential that your governance process supports the business rather than being a blocker to work around.

The Importance of Oversight and Assurance

The complex topic of oversight and assurance remains a key consideration. With recent regulatory fines a top concern, understanding system configuration is essential.  

Whether you are relying on an external system or in-house monitoring, it's vital that you know your system is highlighting what you think it is. Your rules, parameters, and list thresholds are essential, but understanding your own data is equally important.

Data challenges are common, from poor quality and missing data to managing data held across a myriad of legacy systems; it's essential to ensure that all the data you need for effective monitoring is accounted for in your controls.

For example, if you have different legacy systems where the same transaction code can mean different things, you need to ensure that this is considered in your transaction monitoring rules. This can mean that getting your monitoring system up and running takes longer but is vital in capturing and interrogating the activity in your business.

Tech Should Support, Not Replace Humans

Human interaction will always be key in fighting financial crime. Although technology is evolving rapidly, the value of experienced, well-trained staff should not be underestimated, nor can it be effectively replaced.

"Experience and a 'gut feeling' when something in a case feels wrong can't be automated."

Well-trained staff can recognise nuances, detect patterns that automated systems might miss, and make informed decisions when dealing with complex cases, often picking up behavioural signs that don't leave a data footprint. Experience and a "gut feeling" when something in a case feels wrong can't be automated. Equally, the different approaches to dealing with customers often require a personal response—it may be empathy or dogged determination, but the human touch remains key to getting the best outcome for the customer.

Technology is vital in streamlining many processes by handling large volumes of data and automating routine tasks. Still, the human element ultimately ensures these systems are effective. Financial crime prevention isn't just about flagging suspicious activity—it's about investigating, understanding, and responding appropriately.

By leveraging technology to handle repetitive, low-value tasks, businesses can free up their experts to focus their expertise on the greatest threats.

If You're Not Sure, Ask!

Maintaining a thorough understanding of financial crime detection systems is generally considered best practice in financial crime prevention globally.

To quote my very first manager, "If you're not sure, speak up and ask. Don't ever try to blag your way through."

For example, in the UK, The FCA Financial Crime Guide lists as poor practice:   

"A firm using an automated system lacks an understanding of what the system is detecting and why. This may be because of, for example, staff turnover, poor documentation or weak communication with the system's vendor."

The relationship between you, as a FinCrime professional and your supporting team is key. If you're using an external TM provider and you don't understand your system, then ask them for help. Ask them to explain, document and explain again until you understand. Likewise, when it comes to your internal stakeholders, whether IT, data, AI, or any other specialist, don't be afraid to ask until you're satisfied.

You're the person accountable for maintaining your financial crime perimeter, but you shouldn't feel alone. Your team, your suppliers, your colleagues and your peers have your back.

Moving Forward Together

The fight against financial crime is a continuous challenge, requiring vigilance, adaptability, and collaboration. Understanding risks, refining monitoring systems, and ensuring governance supports rather than hinders effective decision-making are all essential components.  Striking the right balance between technology and human expertise is also critical—while automated systems play a key role, they are only as effective as the people who manage them.

Above all, financial crime prevention is not a solo effort. Whether through internal teams, external providers, or industry peers, the strength of our collective knowledge and shared experiences makes the biggest impact. By staying engaged, asking the right questions, and embracing best practices, we can all play a part in making financial crime detection more effective and resilient.

The Jade ThirdEye team is always here to support you - whether through best practices, guidance, or simply a conversation. Let's keep working together to strengthen financial crime detection and prevention.

Learn more about our Financial Crime Monitoring system here, or contact us to schedule a meeting with one of our experts.