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Methods of Monitoring

Banks need to have suitable mechanisms to identify suspicious transactions. The methods for monitoring may be broadly classified as follows

  • Observation
  • The staff at the bank’s branches may at the time of processing the transaction or otherwise come across certain transactions not in line with the profile of the customer.
  • Certain behaviour displayed by the customer during their interactions with such customer may also lead to suspicion.
  • Banks may advise their branch staff to report such instances to the principal officers/ his representatives so that additional due diligence may be done on same.
  • Analysis of Exception Reports:
  • Banks may have in place a system of generation of exception reports at branches or at the central office to examine accounts based on certain threshold limits.
  • Suitable due diligence may be conducted for these accounts and accounts concluded to be suspicious may be reported to the FIU-IND through the principal officer.
  • AML Software:
  • Banks may have an AML software to generate alerts/ exceptions and then channel these alerts for suitable due diligence and reporting.
  • Alerts concluded to be suspicious might be reported to the FIU-IND through the principal officer.
  • One of RBI circulars requires banks to put in place an appropriate software application to throw alerts when the transactions are inconsistent with risk categorization and updated profile of customers