Common Controls for Identifying Suspicious Money-Laundering Activity

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The two most common controls that a financial institution (FI) uses to identify suspicious money-laundering activity are Sanctions Screening and Transaction Monitoring Rules.

1. Sanctions screening: Sanctions screening involves checking individuals and entities against government-maintained lists of individuals and organizations that are prohibited from doing business or transacting in certain countries or jurisdictions. This helps FIs to identify any transactions or activities that involve individuals or entities that are on the list. Sanctions screening is a crucial component of AML compliance as it can help identify potential money laundering activity and prevent violations of economic sanctions.

2. Transaction Monitoring Rules: Transaction Monitoring Rules are used to detect suspicious patterns of activity that may indicate money laundering. These rules are set up to identify unusual or suspicious activity, such as transactions that are significantly larger than usual, transactions that involve high-risk countries or individuals, and transactions that occur outside of normal business hours. Transaction monitoring can also help FIs to detect other types of financial crimes, such as fraud or terrorist financing.

Adverse media information, governmental subpoenas, and search warrants are not controls used to identify suspicious money laundering activity. Adverse media information refers to negative news or information about an individual or entity that is publicly available. Governmental subpoenas and search warrants are legal documents used by law enforcement to obtain information or evidence related to criminal investigations. While these may be used to investigate money laundering, they are not controls implemented by FIs to identify suspicious activity.