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Transaction Monitoring for Money Transfer Services  – More Than Counting Clicks

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The United Kingdom’s remittance sector, long dominated by money transfers to the Indian Subcontinent, is experiencing  growth and diversification. Remittances to Caribbean nations and several African countries continue to grow, especially to those in West and Sub-Saharan Africa. The industry faces a broadening market with increasing complexity. And in the UK, regulatory compliance features as a significant “must” for those businesses participating.

Changing markets need fair and transparent offerings

In 2022, remittances to Africa approached $100 billion. Granted, that’s spread across many countries,  yet it remains a significant contribution to the continent’s Gross Domestic Product (GDP). Projections suggest that the African remittance market could escalate to $500 billion by 2035, propelled by increasing mobility and innovations in digital technology. However, although people sending money from the UK can often access low or zero fees, the cost of sending and receiving money can be high. According to the World Bank, that can mean fees of up to 20% in some parts of Sub-Saharan Africa. That’s much higher than the current global average of about 6% and even further from the UN Sustainable Development Goals of 3%

Addressing these challenges is not just about economic efficiency, although that is an important element. It overlaps with ensuring effective compliance with financial regulations. Central to these regulations are Know Your Customer (KYC) checks and Transaction Monitoring. KYC serves to verify customer identities, and helps mitigate risks associated with money laundering and terrorism financing.

More dynamically, Transaction Monitoring plays a key role in overseeing customer activity to ensure they remain within legal bounds. After all, meeting KYC requirements is no guarantee of ethical behaviour after that point. Being fully compliant – which also means fully understanding your business – also helps reduce costs.

One-size-fits-all solutions are no longer enough

Implementing fit-for-purpose systems can be challenging.  Businesses running Money Transfer Services, but especially smaller enterprises, will quickly be overwhelmed if transaction monitoring is a manual process. Automation has long been recognized as the solution. Effective automation helps maintain compliance without burdening operational capacity. Yet to automate properly requires huge investment, so it’s standard practice to turn to a third party specialist provider to deliver the right service.

Choosing the right provider is critical. Transaction monitoring needs to be about more than simply logging what happens and questioning the very obviously atypical. What’s required is the ability to understand and analyse patterns of behaviour. In turn, that means not just carefully constructed and complex algorithms but also an option to customise according to the needs of individual businesses.

Building a strategic advantage

Effective transaction monitoring can be about more than compliance. The ability to swiftly and accurately analyze transaction data allows businesses to respond promptly to potential risks. Then they safeguard not only customer trust and their own reputation, but also their bottom line.

Robust yet sensitive transaction monitoring is at the heart of compliance. When a service that can identify suspicious or unusual transactions can combine that information with a global profile (built from multiple databases) for each customer, only then does transaction monitoring deliver the quality of insight necessary for a business to thrive. Choose the right compliance service and you’re well on the way to the sort of operational flexibility that underpins sustained growth too.

By Declan Morton, staff writer at Essiell Compli.


For reference: Analysts see a $500bn Africa remittances market by 2035, PHILLIP ISAKPA IN Business a.m., June 11th 2024 ;   The Deep dive: Africa’s remittance market, By Puja Sharma, IBS Intelligence, June 6th 2024

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