Ongoing monitoring is a term used often in the AML space, but it covers many different activities.
International standards set by the Financial Action Task Force (FATF) mandate that firms should “Conduct ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the institution’s knowledge of the customer, their business and risk profile, including, where necessary, the source of funds.”
Regional guidance for Australia, New Zealand and the United Kingdom specifies the ongoing monitoring of customer relationships, including transaction scrutiny and keeping customer due diligence (CDD) information updated.
As a minimum, customer due diligence includes ID and verification checks. It also routinely covers the need to understand the intended nature of the business relationship; knowing whether the customer is legally entitled to the product or service (I.e. is not the subject of any government sanctions) and understanding the risk posed by each customer in order to apply a risk-based approach to ongoing monitoring.
Firstly, you need a robust and timely way of identifying any customers (or beneficial owners) who are Sanctioned, are PEPs, or otherwise present heightened Money Laundering or Terrorist Financing risks. This will likely require some kind of screening tool.
This will vary depending on your firm, but as a minimum, it should be at onboarding and then “regularly” thereafter. “Regularly” should be defined by each individual firm and documented in policy. Of course, the policy should then be applied in practice.
It could be daily, weekly or monthly, though it’s advisable to avoid longer intervals than that. It could also be every time a particular “trigger” event occurs, or it could be a combination of these.
You should also consider how you would identify if an existing customer becomes sanctioned or becomes a PEP – how would you identify changes to details on a watchlist?
Good customer screening is not just about ticking compliance boxes; it’s about implementing a proactive, risk-based approach that evolves alongside your business and regulatory requirements. Ongoing monitoring, as emphasised by international standards like FATF, is the cornerstone of an effective AML program. It involves more than just initial customer due diligence, it’s about continuously scrutinising transactions, updating customer information, and adapting to new risks or regulatory changes.
Effective customer screening enables firms to detect potential risks, maintain compliance, and allocate resources efficiently. A well-structured screening process should ensure that potential risks are identified early, alerts are meaningful and actionable, and compliance obligations are met. To achieve this, good customer screening should consist of the following:
By incorporating these principles, firms can ensure their customer screening processes are effective and efficient. This is where modern screening solutions can make a significant difference.
For instance, Jade ThirdEye addresses these components through integrated features that align with industry best practices:
In today’s dynamic regulatory environment, effective customer screening is not just good practice it’s essential for safeguarding your business from financial crime and protecting its reputation. With the right systems and policies in place, you can meet your compliance obligations with confidence, minimising manual effort while maximising accuracy and efficiency.
For more information on how Jade ThirdEye can support your customer screening, transaction monitoring and regulatory reporting requirements, to talk to one of our experts or arrange a demo, please reach out to us using the form below.