Navigating AML flags for exotic currency flows
Been thinking about the complexities in flagging unusual activity, especially with increasing cross-border flows into less liquid pairs. The usual rules for large transfers work fine for $EURUSD or $USDJPY (currently at 161.759). But what about significant volume in a more exotic currency pair, say, a local African currency to a stablecoin? The percentage deviation from typical volumes can be massive, yet still represent a relatively small notional value compared to G7 pairs. How are compliance teams adjusting their AML thresholds and AI models to account for this without generating an unmanageable number of false positives? It's a fine line between diligence and operational drag. The nature of 'normal' is so varied across asset classes and regions now.
That's a really good point. The traditional AML models often struggle with low-volume, high-volatility pairs where 'normal' is already quite varied. It definitely requires a more nuanced approach than just absolute value thresholds.