How transaction monitoring works
Each transaction is tested against rules and models, in real time before the money moves or in batches afterwards. Typical scenarios are:
- Amounts just under a threshold, repeated
- Money in and straight out again, with no balance kept
- Activity that does not fit the customer's stated income or business
- Payments to or from high-risk countries
- Many senders paying one account, or one account paying many
- A dormant account that suddenly becomes busy
What the law requires of transaction monitoring
Directive (EU) 2015/849 makes ongoing monitoring one of the four customer due diligence measures. Transactions are scrutinised to ensure that they are consistent with the firm's knowledge of the customer, the business and the risk profile, including the source of funds where necessary (Article 13). The UK's Money Laundering Regulations 2017 say the same in regulation 28.
Transactions that are complex, unusually large, in an unusual pattern or without an apparent economic or lawful purpose have to be examined, and monitoring increased (Article 18).
From 10 July 2027, the EU's AML Regulation sets maximum intervals for updating customer information: one year for higher-risk customers and five years for the others (Article 26).
Why transaction monitoring shapes a product
A hit raises an alert. An analyst closes the alert with a recorded reason, asks the customer for more information, or escalates it towards a suspicious activity report.
Monitoring needs data that the product has to keep from the first day: the customer's expected activity, every transaction with its counterparty, and the history of alerts. Real-time rules add a step to the payment flow, so customers feel their speed and their false positives.
Transaction monitoring, fraud monitoring or screening?
- Fraud monitoring
- Protects the customer and the firm from loss, and decides in milliseconds. AML monitoring looks for crime the customer may be committing, and can work after the fact.
- Sanctions screening
- Matches names against lists. Monitoring looks at behaviour over time.
- KYT
- Transaction monitoring for crypto-assets, which adds blockchain data on where funds came from.
Where Transaction monitoring shows up in a platform
Modules that do the work
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
- Fraud & riskReal-time fraud scoring, limits and case management, with the risk engines you already trust.
- Analytics & monitoringProduct analytics, attribution, engagement and crash reports, on a tracking plan you control.
- KYC / AMLIdentity checks, screening and ongoing monitoring, with the verification provider you choose.
Platforms that need it
Where it is written
The laws and standards this page's facts come from.
- Directive (EU) 2015/849, the Anti-Money Laundering Directive, consolidated (EUR-Lex)
- Money Laundering Regulations 2017 (legislation.gov.uk)
- Regulation (EU) 2024/1624, the AML Regulation (EUR-Lex)
General information, not legal advice: what applies to you depends on your services and your market.