In AML, a false positive occurs when a transaction monitoring system flags a legitimate transaction as suspicious.
Although false positives also can happen during the screening process, today we will focus on false positivies in transaction monitoring.
If you are an experienced compliance probably you know that false positives can be a huge headache.
Why?
Because:
Instead of investigating real suspicious activity, employees spend a significant amount of time in investigating activity wrongly flagged as suspicious.
Flagged transactions may result to blocked transactions and cause unnecessary delays and frustration to customers.
A high rate of false positives can lead to missing genuine suspicious activity.
What Causes Too Many False Positives?
Several factors can contribute to a high rate of false positives in AML systems. Here are three common pitfalls:
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