As required by Article 7 of the AML-CFT Decision and Paragraph 16.24 of the Standards, LEH must continuously monitor all their transactions to ensure that the transactions conducted are consistent with the information they have about the customer, their type of activity and the risks they pose, including, when necessary, the source of funds. Transaction monitoring systems allow the LEH to monitor the transactions made by their customers in real-time and/or on a daily basis. All LEH should have a form of transaction monitoring system in place in order to monitor for any suspicious transactions to and from customers. Failure to have such a system in place may not only cost a LEH its reputation, but also lead to large fines and other penalties.

Transaction monitoring is distinct from the ongoing monitoring discussed in section 4.4.1. Both are required, but the purpose of transaction monitoring is not primarily to update the customer risk profile but to detect and investigate transactions that may need to be reported to the FIU because they are potentially related to illicit activity. While CDD review (as discussed in section 4.4.1) may take place once a year, transaction monitoring occurs in real time and is thus able to support prompt reporting to the FIU after the transaction takes place.

Under Article 4.2 (a) of the AML-CFT Decision and Paragraph 16.24.1 of the Standards, Transaction monitoring must be commensurate with the risk posed by the LEH’s size, scale, complexity, the nature and volume of its Exchange Business, the nature of its customer base, and the geographic areas in which it operates. The transaction monitoring system used by a LEH, whether automated or manual, must be able to flag unusual movements of funds or transactions for further analysis. Rules and parameters must take account of ML/FT typologies in the Exchange Houses sector.

When the monitoring system generates an alert, it must be investigated and either escalated or otherwise dispositioned in a timely fashion in order to support prompt reporting to the FIU. Transaction monitoring systems should create an audit trail of all activity related to alert generation, investigation, and disposition to have a clear understanding of the activity, and potentially report it to the relevant authorities.

For more details and information, please refer to the CBUAE Guidance for Licensed Financial Institutions on Transaction Monitoring Screening and Sanction screening⁹.

⁹ Available at https://www.centralbank.ae/en/cbuae-amlcft.