AML screening for smaller, less obvious transactions: Where do you draw the line?

Question

I've been going over our AML procedures again, specifically around transaction monitoring for higher-risk clients. The obvious large transfers or multiple structured deposits are clear-cut for flagging, but I'm trying to get a handle on how others manage the less direct stuff. We have clients with fairly complex, international business structures, and sometimes smaller payments move between entities that, on their own, don't scream 'suspicious,' but could potentially be part of a larger, subtle layering effort if you connect the dots over time. My question is, without triggering an excessive number of false positives or overwhelming analysts, what kind of thresholds or patterns are others finding effective for identifying these more nuanced, smaller-value but potentially significant transactions that warrant deeper investigation?

suthidawattana · Accepted Answer

That's a tricky one. We've found that setting a dynamic risk score based on client profile, transaction frequency, and origin/destination helps, even for smaller amounts. Are you integrating any third-party risk assessment tools, or is it mostly in-house algorithms?

e2e_apiowner · Answer

For less obvious transactions, we've found that focusing on patterns and the 'why' behind the movement, even of smaller sums, is more effective than setting arbitrary thresholds. It often comes down to the beneficial ownership and the commercial logic, or lack thereof, within the entire network.

destiny_h · Answer

That's a tricky one. We've found that it really comes down to building out comprehensive customer risk profiles. If you've got a good handle on their typical transaction patterns and business rationale, then even smaller, unusual movements can stand out.

AML screening for smaller, less obvious transactions: Where do you draw the line?

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