Money laundering concerns are becoming more dangerous for financial institutions as financial crime grows. Regulators established an AML Compliance Program, and financial institutions must follow these standards to decrease this risk. They may face regulatory fines if they do not. The advancement of technology has brought technical means of money laundering, making it nearly difficult for financial institutions to comply with these requirements using old methods.
AML transaction monitoring is a technology used by financial institutions to prevent money laundering and terrorism funding. Institutions can use transaction monitoring to scan and report suspicious transactions in real-time. As a result of these deals, transaction monitoring software may create false positive and false negative results.
What is a False Negative result?
Among all suspicious cautions generated by transaction monitoring, false positive results are referred to as actual non-risk results. Excessive false positives waste time. False positive is the inverse of false negative, with the risk and hazard of false negatives being significantly greater. False-negative money is characterized as failing to notice dangerous transactions that must be laundered. The consequences of this situation are disastrous. False positive warnings are a tremendous waste of time for AML professionals, while false negative signals have far-worse implications, such as a loss of reputation and significant fines. Experts must also deal with false-negative alerts when attempting to deal with false-positive signals, because solving one may enhance the risk posed by the other.
Are False Negative Results dangerous?
False negatives are undetected cyber-attacks that are overlooked by security software because they are done immobile and clever. No cybersecurity or data breach prevention solution can completely eradicate all risks. As technology advances, so do these crimes, and financial criminals attempt to trick these cybersecurity measures. When these bells go off in financial institutions, there are consequences. Money laundering and terrorist funding are never tolerated by regulators in financial institutions. As a result, firms must follow the AML compliance program; if false negative results occur, they are not completely compliant with this program. As a result, they are punished substantially for failing to comply with rules, and their company’s reputation may suffer as a result.
How to operate with False Negative Results?
The easiest method to scan transactions is to look at the event as a whole. To detect suspicious conduct, all jigsaw pieces must be recognized and considered. As a result, the number of false negative and false positive alerts can be minimized. By correctly integrating machine learning, financial organizations may take a comprehensive view of transactions, avoiding False Negative alerts. Machine learning can display all actions at once and in conjunction with all other accounts, capturing their interaction and uncovering hidden money laundering activity networks. Transactions on seemingly unrelated accounts are interrelated, and the system can fool money laundering activities through these accounts. As a result, people are unable to perceive these hazards, resulting in false negative results. Machine learning can see these unrelated accounts as helpful in identifying hazards.