Transaction monitoring
Also known as: AML transaction monitoring · Suspicious activity detection · Transaction surveillance · AML monitoring
Tracking a customer's transactions over time to detect patterns suspicious of money laundering or fraud and to report them to the authorities.
Legal basis
31 CFR 1020.320 (bank SAR filing)
Knowing the customer at onboarding is not enough: laundering happens in the flow. Transaction monitoring watches activity against rules and models — amounts out of the customer's pattern, structuring to stay under reporting limits, chained transfers between connected accounts — and raises alerts for review. It is what supports the Bank Secrecy Act obligation to file a Suspicious Activity Report, generally for suspicious transactions of $5,000 or more within 30 days of detection, alongside the Currency Transaction Report for cash over $10,000.
The bottleneck is not generating alerts, it is the false-positive rate: crude rules flood the investigation team with noise. Tying the transaction to the graph of accounts and to the holder's risk is what separates a real alert from a legitimate movement that merely looked strange. Internationally, FATF Recommendation 20 sets the same duty to report suspicious transactions.
Frequently asked questions
What is transaction monitoring in AML?
It is continuously tracking customers' transactions to identify patterns associated with money laundering or fraud — atypical amounts, structuring, chained transfers — generating alerts that, when confirmed, become a Suspicious Activity Report filed with FinCEN.