Ongoing monitoring Procedure
For effective and sound ML/FT risk management, ongoing monitoring is an essential aspect. The International Finance Corporation (2019) posits that to manage risks effectively, a bank should understand its customers’ reasonable and customary banking activities that allow the bank to detect unusually or attempted transactions that fall out of the standard banking activity patterns. Lack of such knowledge leaves gaps that make financial institutions fail in identifying and reporting suspicious dealings to relevant authorities (International Finance Corporation, 2019). All business transactions and relationships should be conducted with ongoing monitoring. Nonetheless, the degree of monitoring should be founded on risk as indicated in the bank’s customer due diligence efforts and risk assessment.
According to Basel Committee on Banking Supervision (2017), financial institutions must look into their customers’ transactions and conduct a bordering service or product inspection to identify and lessen evolving patterns of risk. Moreover, all banks should put in place systems that detect suspicious or unusual patterns of transactions activities. To establish a scenario where the risk management team will identify such activities, a bank should consider developing customers’ risk profile according to the information collected during its CDD efforts, risk assessment conducted by the bank, and more data collected from authorities like law enforcement and others under its control (Basel Committee on Banking Supervision, 2017). For instance, a bank could be conscious of specific arrangements or schemes to launder profits of crime occurring in its jurisdiction as noticed by authorities. In part of its risk assessment process, the bank will assess the threat of these activities linked to these activities that may be happening in the bank by classifying and grouping accounts, customers, product usage, or transaction pattern (Basel Committee on Banking Supervision, 2017). As per this knowledge, the risk assessment team should structure and apply necessary monitoring con trolls and tools to ascertain such activity through computerized monitoring systems or setting limits to specific categories or classes of activities.