What is the main function of a transaction monitoring system?

The main function of a transaction monitoring system is to detect and flag suspicious activities in real-time. These systems are crucial in anti-money laundering (AML) programs as they continuously analyze transactions conducted by customers and identify patterns or anomalies that may indicate illicit activities, such as money laundering, fraud, or terrorist financing. By monitoring transactions as they occur, these systems help institutions comply with regulatory requirements and take prompt action to investigate or report suspicious activities to the relevant authorities.

While facilitating high-volume transactions, optimizing customer service, and providing analytics on consumer spending are important aspects of financial operations, they do not capture the primary purpose of transaction monitoring systems, which focus specifically on ensuring the integrity of financial transactions and protecting the institution against potential criminal activities.