The need of the hour

  1. Use transactional data to identify the risk exposure
  2. Assess which risk areas and red flags are exposed and have no or inferior countermeasures
  3. Perform segmentation and form segments
  4. Use the information from risk assessment, segmentation and transactional data to identify the possible suspicious activity that may be occurring or could occur
  5. Use the above mentioned information to devise models and rules for monitoring transactions
  6. Devise a control system that provides feedback to the monitoring system that differentiates between true and false positives, and improves alert quality and control efficiency
  7. Use improved efficiencies from the above mentioned processes to lay the groundwork for model validation and prepare for an audit
  • Consider a potential change in transactional behaviour that would have a corresponding change in risk exposure; this change in transactional behaviour would be identified by the control mechanism and notify the compliance manager/ MLRO/CCO/CRO
  • Based on this notification, the possible risk exposure will be identified, and to address the residual risk, it will be modified or new controls implemented
  • After the risk is identified and proper segmentation carried out, an improved business logic will be implemented
  • Along with the feedback on the true and positive alerts, a justification is provided for the false or true positive alerts



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Acuity Knowledge Partners

Acuity Knowledge Partners

We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.