Any Business owner has a risk of becoming a victim of financial fraud. Yes, it can happen to you too. No matter how well prepared you think you are for this kind of situation, there is always the possibility of overlooking ongoing transactions within your company.
You may ask yourself, why is it important?
The answer could not be simpler. By regularly monitoring transactions, you can prevent a lot of financial crimes from happening to any technical issues that are present in the payments in your organization.
We’ll break it down for you below.
The Importance of Transaction Monitoring
Monitoring transactions in e-commerce businesses won’t allow any suspicious activity to go unnoticed. It will help you to prevent any frauds from going further and destroying everything you’ve ever built. The concept of transaction monitoring is to notify you whenever something unusual happens in your system.
Therefore, being able to detect how many times a certain action was performed, or whether it comes from a high-risk country, will make your job a lot easier, than trying to keep track of all the transactions which can be exhausting. By simply employing this kind of technology, you can identify any money laundering and terrorist financing.
The purpose of employing transaction monitoring is to secure and protect your business from illegal financial activities. Regularly checking transaction activity may require a lot of effort, and you may accidentally skip a transaction. By choosing transaction monitoring software, you’ll have fewer worries about whether you checked every translation or not.
Transaction monitoring software
Your company can benefit from transaction monitoring software that can illustrate any rapid changes in your transactions and increase the strength of your system. The monitoring in itself can employ different techniques to detect fraud and errors within the business. It’s a process of real-time inspection that has full financial control.
It’s very unlikely for clients to notice any changes in their data, which means that you have the responsibility to secure their data by using an effective monitoring system to identify any theft. To ensure the safety of the client’s data, any company should use proactive monitoring, meaning that access to the data is strictly coming from authentic business reasons.
In case of any violation of the rules, your monitoring software will automatically alert you. You won’t be able to miss any of the important information if you go for this kind of monitoring software.
Different types of transaction monitoring
Real-time monitoring transactions will help you to identify any crime that happens and block any payments that seem suspicious to you. This kind of TM is great for detecting and preventing financial crime.
Post-event transaction monitoring is used in a situation that didn't detect any suspicious activity at first, and the completed payments are compared to money laundering tactics to ensure that there aren’t any hidden patterns.
Periodic transaction monitoring is used to effectively check the history of old patterns and regulations in the behavior of the client.
Financial crime system
Any business owner should know the risks associated with financial crime and how to defend themselves from it. Part of being a successful business owner is being able to prevent, control, and approach situations where there has been some financial crime. The company’s management team has the role to employ smart tactics and effective systems to better understand financial crime.
When building a relationship with a customer, there should be ongoing monitoring of the transactions to make sure that your client is being consistent by following your business regulations and rules. By simply using a transaction monitoring system, it’s easier to spot any potential money laundering. This kind of software will notify you when changes in your client’s profile are made.
Meaningful monitoring is only possible when you take the responsibility to employ good tactics in minimizing the risk of becoming a victim of financial fraud.
Benefits of employing effective transaction monitoring software
No matter if you own a huge company or you’re just a small business, you need to be prepared for the worst to happen. If you weren’t quite sure whether you’ll need transaction monitoring, you might change your mind now after we discuss the benefits you’ll receive by employing the monitoring method.
The transaction monitoring system automatically collects all the ongoing data, and in the process, it digs deeper to find more important information about the transactions and some potential red flags that may appear in the process. Those kinds of analysis will bring more attention to a particular situation that needs further investigation.
The real-time screening will allow you to quickly respond to any type of financial crime that’s happening. So the process of screening is happening all the time, and you’ll have access to the collected information whenever you want. By using this approach, you’ll effectively fight any crimes.
When you focus on optimizing TM, the effectiveness of the system will help you to redirect your focus towards areas with high risks of criminal activities. The TM system will report detailed information about behavior, patterns, relationships, and links, allowing you to properly manage the situation.
Red flags on transactions
Any suspicious activity can be spotted by following the list below.
Transactions that have no further information on the counterparty
A client who finds it difficult to provide any information about themselves
A client who doesn’t have a legitimate reason to use particular services which are distant to them, meaning that the same kind of service and goods can be found near them
Any delays in providing copies of all the accounts or other important documents
Increased transactions within a short period
Unusual cash settlements
Frequent changes in the client’s profile
Transfer of investments to unrelated third parties, etc.
Regarding international IP addresses, if you receive orders from high-risked countries, it’s important to investigate the transactions. Also, it’s up to you if you want to accept any order with a different billing address than the shipping one.
And remember to always watch out for the card security code. It’s usually several three to four digits that the cardholder should provide to prove that the card is in the right possession. If there are continuous mismatches of the code, it’s a sign of potential credit card fraud. A client who is not consistent with a strict pattern of behaviour is worth investigating.
Traits of a good transaction monitoring software
Good transaction monitoring has an easy way to navigate through the data and information in the process of investigating any unusual transactions. Another positive trait of a good TM is the ability to dig deeper into the intentions behind the transactions and investigate IP addresses, behaviours, click speed, abnormal activity, etc.
Effective transaction monitoring only requires a single source of truth of the data, by using the power of AI(Artificial intelligence). Any data collection should be carefully examined in case there are any signs of misrepresentation of any kind.
Modification of rules is an important factor when choosing the right transaction monitoring software. Many criminals become creative in finding new ways to go under the radar of monitoring unnoticed. That’s why frequently adjusting the rules towards obtaining effective and safe systems that can’t be easily accessed by criminals.
Automatic and manual transaction monitoring
Automatic monitoring is completely employed, with tools and software that helps in detecting abnormal activity. Humans are more likely to make errors when employing manual transaction monitoring, that’s why automatic TM is superior compared to them.
However, even when you’re using automatic monitoring software, there are still some things that need human attention. This means that when a suspension is detected, a human needs to do further investigation and dig deeper into the situation. As well as people are needed to make sure that the monitoring system works in the best way possible, and to ensure that there aren’t any technical issues.
Transaction monitoring can be challenging, but it’s all for a great cause and better security of your business. By employing the TM software, it’s easier to spot any unusual activity that’s been going on in your company’s environment.
When you decide to use transaction monitoring you’ll make it harder for fraudsters to try and play you into their twisted criminal activities. You can set your own rules and regulations without prior technical knowledge.
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