AML Red Flags and Transaction Monitoring Alerts - Where's the Line?
Hey everyone, fairly new to the compliance side of things and trying to get my head around AML a bit more deeply. We're running a pretty standard transaction monitoring system, and I'm finding myself constantly debating where to set the thresholds for alerts. I understand the concept of 'red flags' and unusual activity, but it often feels subjective. For example, a client making a series of deposits just under our reporting threshold, or frequent international transfers to a high-risk jurisdiction. On paper, these are alerts, but how do you guys really differentiate between a genuinely suspicious pattern that warrants a deeper dive (and potentially an SAR) versus just a noisy alert from a client with genuinely complex but legitimate financial activity? It feels like there's a fine line between being thorough and just drowning in false positives. How do you approach that balance in practice without missing the real risks?
It's definitely tricky. For deposits, are you looking at frequency, value, or both? And how does that compare to the client's expected activity or historical patterns?