Ongoing Monitoring is a crucial aspect of risk management for banks and financial institutions. It involves the continuous evaluation of clients according to their established risk profile. This process is essential for identifying potential risks and ensuring that all relevant information about clients is reviewed regularly.
The ongoing monitoring process involves the collection and analysis of various data points, including transaction history, credit reports, and other relevant information. This information is then used to assess the level of risk associated with each client and determine whether any further action needs to be taken.
In addition to identifying potential risks, ongoing monitoring also helps banks and financial institutions maintain compliance with regulatory requirements. Many regulatory bodies, such as the Financial Crimes Enforcement Network (FinCEN), require financial institutions to conduct ongoing monitoring of their clients to detect and prevent money laundering and other financial crimes.
It is a critical process that must be implemented by banks and financial institutions to ensure the safety and security of their clients' financial assets. By continuously evaluating their clients, these institutions can identify potential risks and take appropriate action to mitigate them, ultimately strengthening their relationships with their clients and building trust in the financial industry.
Especially high-risk clients should be checked periodically for criminal threats. On the other hand, high-risk clients should be checked periodically for criminal threats. Ongoing monitoring is applied in order to periodically check the high-risk customers in the sanctions and PEP lists. With the Ongoing Monitoring Process, businesses can protect themselves against risks such as non-compliance and loss of reputation. Depending on the risk reduction plan, other reasons to consider include the following:
- Increases inefficiency
- Out-of-town or suspicious cross-border behavior
- Inclusion of individuals in sanctions lists
- Talking about negative media
If customers' account activity is considered to be irregular, banks and financial institutions should prepare Suspicious Activity Reports (SARs) and submit these reports to the institutions they are responsible for.
FAQ's for Ongoing Monitoring
Why is Ongoing Monitoring Needed?
The most important motivation in ongoing monitoring processes is the change in customer profiles. While in the process with a client, the client's risk may change; a client may be low risk, high risk, or vice versa. Examples of changing risks include:
- Changing the risk profile of the customer, for example, switching to the PEP category, etc.
- Changing the situation and risks of high-risk or sanctioned countries
- Change in your organization's risk appetite
- Change in your business relationships
In this case, the customer's risk may change; a customer may be low-risk, very risky, or vice versa. For these reasons, ongoing monitoring is required, and organizations need it to monitor changes in the client risk profile and to review risk assessments.
What are Ongoing Monitoring Benefits?
Ongoing monitoring is applied to check high-risk customers on Sanctions and PEP lists periodically. This protects businesses from risks such as non-compliance and reputational damage. In addition;
- You can check thousands of national and global databases for updates on information about your customer and the countries in which you operate.
- With ongoing monitoring, you can periodically be notified of any negative media or watchlist additions about your risk.
- In high-risk markets, avoid increased business risks, and you can avoid the resulting financial losses.
- You can check thousands of national and global databases for updates on information about your customer and the countries in which you operate.
- Ongoing monitoring can also add flexibility to your compliance program due to periodic updates, and you can also make compliance more effective.
When is Ongoing Monitoring Required?
Once you have established a business relationship with a customer, it is important to continuously monitor this relationship based on your risk assessment. The frequency of ongoing monitoring will vary depending on the level of risk assigned to each customer. Customers identified as low risk may require less frequent monitoring, while those identified as high risk require more precautionary measures. It is expected that policies and procedures include the frequency of ongoing monitoring based on the institution's risk assessment for the client or client group, in accordance with regulatory expectations.
What is Enhanced Ongoing Monitoring?
You should take enhanced precautions and perform enhanced ongoing monitoring for a client you identify as high risk in your risk assessment. This means that you have to take extra precautions in addition to what is necessary for accordance with the customer risk level. You can consider the following methods to ensure better Monitoring of your high-risk customers on an ongoing basis:
- Development of reports and more frequent review of these reports on high-risk transactions;
- Reviewing transactions according to an approved schedule with management's signature;
- Mark certain activities or those that deviate from your expectations and raise concerns as needed;
- Setting business limits or parameters that will trigger early warning signals on accounts or transactions and require mandatory review.
What are the Records Retained for Ongoing Monitoring?
For ongoing monitoring, records of the measures taken by the companies and the information obtained from the ongoing monitoring of the customers with whom they have business relations should be kept. These records generally include the following;
- Processes implemented to perform enhanced ongoing monitoring of high-risk clients;
- Processes for recording information obtained as a result of your ongoing monitoring;
- Processes for recording information obtained as a result of enhanced ongoing monitoring of high-risk customers
- Information obtained as a result of high-risk customers.
Apart from these, policies and procedures that may form part of ongoing monitoring records should be summarized, and measures used to monitor business relationships continuously. However, information obtained as a result of your ongoing Monitoring is likely to be specific to a particular business relationship and not included in your policies and procedures, so it should be documented separately.
Information obtained from your ongoing monitoring activities can be documented and updated through various records. For example, updates to a customer ID, entitlement, or business relationship information can be saved to any file held with a customer. In addition, it is required by the regulators to keep a record of the measures taken and the information obtained from this ongoing monitoring for at least five years from the date of creation of the record.
Sanction Scanner Ongoing Monitoring Tool
Sanction Scanner is a comprehensive software solution designed to help businesses comply with AML regulations and prevent financial crime. The Ongoing Monitoring tool is a key feature of the software, which enables businesses to customize their control period based on their risk profiles and perform customer tracking checks in a timely manner. This helps businesses save time and resources, especially those with high customer volumes.
Moreover, Sanction Scanner offers a robust API that allows for quick and easy integration with your company's existing systems. This means you can automate all your AML control processes with ease, ensuring that your business remains compliant and protected against financial crime.
In addition to Ongoing Monitoring, Sanction Scanner also offers a range of other features, including Sanction & PEP Screening, Adverse Media Screening, and Transaction Monitoring. These features work together to provide a comprehensive AML compliance solution, giving businesses the tools they need to detect and prevent financial crime.
If you're looking for a reliable AML compliance solution that can help you save time and resources while keeping your business safe, Sanction Scanner is definitely worth considering. With its robust features, easy integration, and exceptional customer support, it's no wonder why so many businesses trust Sanction Scanner to help them comply with AML regulations.
