Transaction monitoring software – is it working?

As anti-money laundering regulation becomes more complex and extends in scope to industries that never thought they would be covered, so the range of companies that offer transaction monitoring software has expanded accordingly, writes Andrew Cave. Huge sums are spent but is the investment worthwhile?

Legislation such as the European Union Money Laundering Directives and the USA Patriot Act have effectively grown the market for AML software, with potential demand now witnessed from businesses as diverse as motor dealers and casinos. It is still the financial services sector though that leads the field in terms of investment with suppliers like NetEconomy, Mantas and Fortent (formerly Searchspace). Their expenditure has encouraged the development of rules-based systems, statistical and profiling engines, neural networks, link analysis, peer group analysis, and time sequence matching. The increasing focus on sanctions and politically exposed person (PEP) list screening has also led transaction monitoring vendors to partner with firms like Factiva and WorldCheck to offer firms an integrated defence.