End Use Monitoring in AML Parlance

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Apurva Joshi
Apurva Joshi
Apurva Joshi is independent director on the board of Quickheal Technologies and Minda Rinder P Limited. She is the author of Students Handbook on Forensic Accounting - one of the first textbooks on the subject of forensic accounting. She was featured as Outstanding Entrepreneur in the Book "Arise Awake".

In last few years many global financial institutions such as HSBC, Standard Chartered were fined for failing to detect the suspicious transactions. These penalties highlighted the deficiencies in transaction monitoring programs of global banks. Bank Statement Analysis has become essential in the wake of understanding the customer transactions.

Transaction monitoring refers to the monitoring of customer transactions, including assessing historical and current customer information. Interactions of customers with external parties provide a complete picture of customer activity.

Objective of transaction monitoring is to protect the institution from money laundering and terrorist financing transactions. Transaction monitoring is crucial aspect of AML compliance which helps financial institutions to file relevant Suspicious Activity Reports (SARs).

Most financial institutions rely on AML transaction monitoring software to analyse the transactions and pick out the potentially suspect transactions. For these suspected transactions, compliance staff have to investigate the specific circumstances. The staff is required to manually review these transactions before the SAR is filed with regulators.

As the digitization grows, the transactions volumes are growing beyond control. It is becoming tedious task to review every transaction and segregate the false positives. Hence the bankers are now taking risk based approach to monitor end use of the funds.

Riskpro EUMS for Bank Statement Analysis

Riskpro developed an end use monitoring solution (EUMS) for analysing the interactions of bank customers with heightened risk entities. Based on the transactions in the bank accounts of the customer, it is able to interact with the database of heightened risk entities and inform the bankers where the money is flowing.

This anti money laundering tool is used to screen Politically Exposed Persons, regulatory blacklists, and other india specific sanctions besides analyzing the bank accounts of the customers.

EUMS tool analyse the transfers, deposits, and withdrawals from and to

  • Other banks
  • Other entities
  • Other Individuals

and categorize them as RTGS, NEFT, cash deposits or withdrawals and wire transfers.

The output of this screening activity is a focused examination of transactions. This tool is also used as the forensic auditing tool which helps the bankers to monitor the end use of the funds sanctioned by the banks. Riskpro End Use Monitoring tool is effectively used for analysing the Indian corporate borrowers.

In addition to support the compliance programs, this tool identifies potentially related parties of the borrower or customer. These potentially related parties are instrumental in layering.

Layering is one of the most difficult phases to investigate. During this phase of the money laundering life cycle, transactions are routed through various related parties to hide the origin. Politically Exposed Persons often find it convenient to route the money through different accounts before it is integrated to the account of ultimate beneficiary.

This tool removes the potential layering transactions if multiple bank accounts are uploaded to the system. The Bank Statement Analyser solution supports a wide range of financial statements across various formats. EUMS reads data from statements of multiple geographies across different segments such as retail, small business etc. It knocks off all those transactions which are artificially creating the bogus turnover in the bank account statements.

The predictive mechanism used in the transaction monitoring solution helps the bankers to save significant efforts and time on investigating the scenarios around the transactions.

It has got in-built capability to check the transaction data with the different registries which helps the data to be classified in an informative manner. If you are a banker and would like to see the demo of our solution write back to us on education@indiaforensic.com or feel free to call us on +91-9766594401


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