Choosing a transaction monitoring software: tips and features

In this article, we'll discuss transaction monitoring software, some of its key components, and tips on what to look for when choosing it.

Gabriela Taranu

Content Manager Published 2025-01-17
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Managing transaction monitoring processes solely through manual efforts is simply unrealistic for anti-money laundering (AML) professionals.

The high volume and increased complexity of transactions contribute to a growing demand for an automated solution. 

This isn't just about operational efficiency. The purpose of conducting transaction monitoring is to identify instances of money laundering.

Although difficult to estimate, it's believed that between $800 billion and $2 trillion is laundered annually, representing about 2-5% of the global GDP, a significant portion of the world's economic output. 

Criminals are getting more creative when laundering money. Manual methods alone cannot adequately address the increasing challenges that AML professionals face.

This is why transaction monitoring software automates the process, which is essential for effective AML. But how can you know which transaction monitoring solution suits your business?

In this article, we'll discuss transaction monitoring software, some of its key components, and tips on what to look for when choosing it.

What is transaction monitoring software? 

Transaction monitoring software, also known as a transaction monitoring system, is a solution that monitors, analyses, and evaluates customer behaviours and transactions.

Financial institutions use transaction monitoring software mainly to detect suspicious activities that could lead to financial crime, partly to protect their business and customers and partly because they are legally obliged to do so.

What suspicious activities does transaction monitoring software identify? 

Generally, modern transaction monitoring software can automate the detection of the following red flags: 

  • A sudden change in transaction patterns, such as an increase in the number or size of transactions or dormant accounts becoming active suddenly; 
  • An unusual source of funds, such as crowdfunding; 
  • Geographic exposure, transactions coming from or going to countries where the client has no operations; 
  • Politically exposed persons; 
  • Jurisdiction risk; 
  • Sanctions exposure; 
  • Cash-intensive activities, such as unusual withdrawals or deposits; 
  • Other activities or transactions that stand out from the stated and normal pattern of the client. 

Capabilities of transaction monitoring software  

There are various transaction monitoring solutions designed to meet the specific needs of each business, so the features can vary depending on what you and your AML team require to conduct effective transaction monitoring.

For example, here are some common capabilities of Trapets Transaction Monitoring: 

  • Automatic risk calculation of customers, accounts, and transactions factored in various attributes, such as nationality, country of residence, account type, and product, as well as know-your-customer (KYC) answers; 
  • A vast library of customisable alert triggers based on your risk model, as well as business and product-specific requirements; 
  • Extensive case management capabilities and reporting tools; 
  • Possibility to integrate data from multiple sources, such as banking systems, customer relationship management (CRM) systems, and third-data providers; 
  • API connectivity that allows the software to be integrated with existing business systems, source systems, and third-party data and solutions; 
  • Instant overview of a customer relationship graph; 
  • Tracking and documentation of all the system configurations, allowing easy review and investigation of outcomes over time; 
  • Automatic screening of end-customer and all related entities, such as ultimate beneficial owners (UBO); 
  • Possibility to integrate KYC, customer due diligence (CDD), PEP lists/RCA, and UBO screening into one solution; 

How to choose the right transaction monitoring software for your company 

With numerous solutions available in the market, choosing the ideal transaction monitoring software for your company can become an overwhelming task. 

Choosing the right software requires thorough research to effectively address risks your company may face and combat financial crime.

To help you in your transaction monitoring journey, here are some key features your software should offer: 

  • Alerts: The software should generate alerts about potentially suspicious transactions and behaviours. 
  • Configuration: The software should be configurable to rules based on your risk model and assessment, business changes, customer behaviours, as well as emerging trends and best practices. 
  • Risk assessment: The software should assess the customers' risk level in real-time based on factors such as geographic location, transaction patterns, and business activities. 
  • Relationship overview: The software should be able to map out the relations of persons and companies, as well as identify its beneficial owners and representatives. 
  • Pattern identification: The software should be able to identify known and detect new types of patterns and money laundering behaviours. 
  • Case management and reporting: The software should be able to manage, track, and investigate individual cases. It should also generate reports both for internal use and regulatory compliance purposes. 
  • Data integration: The software should be able to integrate data from multiple sources, regardless of the data source. 
  • Longstanding expertise: The vendor should have deep knowledge in fighting financial crime. 

In conclusion 

Transaction monitoring software helps you and your team not only improve operational efficiency and reach regulatory standards but also assists you in reaching the ultimate goal of combating financial crime.

However, with a wide variety of transaction monitoring solutions available, it can be challenging to determine the right fit for your business needs. 

Trapets Transaction Monitoring helps you automatically detect and identify suspicious activities, allowing you to comply with regulations and effectively fight financial crime. 

To learn more about how Trapets Transaction Monitoring can protect your business, click here. If you're still searching for an effective transaction monitoring solution, download our guide for a detailed checklist on choosing the right software.