transaction-monitoring

Transaction Monitoring Skill - v1.0.0

AML transaction monitoring for ongoing customer relationships. Identifies suspicious patterns, assesses structuring and layering, and prepares Suspicious Activity Reports (SARs).

Overview

Transaction monitoring is a continuous obligation under AML regulations. This skill analyzes transaction data to detect patterns that may indicate money laundering, terrorist financing, or other financial crime.

Detection Patterns

1. Structuring (Smurfing)

• Multiple transactions just below reporting thresholds
• Multiple deposits across different branches/channels on same day
• Pattern of round-number transactions
• Threshold (US): $10,000 CTR threshold; $5,000 aggregated suspicious activity

2. Layering

• Complex routing through multiple accounts or entities
• Rapid movement between accounts with no clear business purpose
• International transfers through multiple jurisdictions
• Use of shell companies or nominee accounts

3. Circular Flows

• Money leaving and returning to same account via intermediaries
• Round-trip transactions with no economic substance
• Funds flowing through subsidiaries back to parent

4. Velocity Anomalies

• Sudden increase in transaction frequency
• Dramatic change in average transaction value
• Activity inconsistent with customer profile or declared business
• Dormant account reactivation with high-value activity

5. Geographic Risk Patterns

• Transactions to/from FATF grey-list or black-list jurisdictions
• Unexplained payments to/from high-risk countries
• Wire transfers to known shell company jurisdictions

Monitoring Process

Step 1: Data Analysis

• Import transaction data (CSV, Excel, or database extract)
• Calculate baseline metrics (average value, frequency, counterparties)
• Identify deviations from customer profile

Step 2: Pattern Detection

• Apply detection rules for each pattern type
• Flag transactions meeting alert criteria
• Score alerts by severity (LOW/MEDIUM/HIGH/CRITICAL)

Step 3: Investigation [HITL Checkpoint]

• Analyst reviews flagged transactions
• Assesses whether activity has legitimate explanation
• Researches counterparties and destinations
• Documents investigation findings

Step 4: Decision

• CLEAR: Document rationale, close alert
• SUSPICIOUS: Draft SAR narrative, escalate to MLRO
• CRITICAL: Immediate MLRO notification, consider account freeze

Step 5: SAR Preparation (if applicable)

Claude drafts SAR narrative including:

• Subject information
• Suspicious activity description
• Transaction details
• Why activity is suspicious
• Supporting evidence

CRITICAL HITL: SAR filing is always a human decision. Claude drafts; MLRO reviews and files.

Output

• Transaction analysis report (Excel with flagged items)
• Alert summary with severity scoring
• SAR draft (if suspicious activity identified)
• Escalation brief for MLRO
• Updated customer risk assessment

Regulatory Basis

• US: BSA/AML, FinCEN SAR requirements ($5,000 threshold)
• UK/EU: AMLD5 ongoing monitoring, POCA 2002 SAR obligations
• MENA: CBUAE, SAMA transaction monitoring requirements

---

Version: 1.0.0 Author: Vyayasan