As part of our expansion of anti-money laundering (AML) solutions for transaction monitoring systems, AML Analytics are pleased to announce the launch of Red Flag Tests. Red Flag Tests has been created by our expert RegTech and SupTech developers as part of our portfolio of solutions to support financial institutions (FIs) in the regulated sector.

Using synthetic data to validate transaction monitoring system rules and scenarios, Red Flag Tests will help analysts understand if a system is working correctly to mitigate financial crime risks. This AML Analytics solution makes it easier for analysts by sorting complex rules into Smart Scenarios.

Red Flag Tests is the newest solution from AML Analytics and a rapid global uptake of this technology is expected due to its innovative abilities to uncover inefficiencies in a transaction monitoring system.

Red Flag Tests uses millions of synthetic transactions to identify weaknesses in a transaction monitoring system’s alerting capabilities so that analysts can eliminate time-wasting inaccuracies and fix the system to drive increased performance.

“Red Flag Tests plays an essential part in the AML compliance programmes of financial institutions as a vital means of mitigating financial crime risks. It brings reassurance that a transaction monitoring system is working correctly, meaning that the system is able to identify and capture suspicious or unusual transactions.” 

Justin Holder | CEO and Founder | AML Analytics

A Red Flag is a regulatory-based indicator that highlights potential illegal activity in a bank account. Red Flags are created using knowledge gained from expert analysis of criminal transactional activity. They are categorised in line with regulatory guidance and are designed to identify specific financial crime typologies, such as the Illegal Wildlife Trade, Modern Slavery or Terrorist Financing.

A transaction monitoring system that is not functioning correctly will not detect suspicious or unusual transactions consistent with known money laundering and terrorist financing typologies. This puts the FI at serious risk of sanction violations and fines.

When a transaction system is working accurately with a manageable number of false positives, Red Flags in financial flows can be identified more easily and financial crime risks are reduced. Red Flag Tests is therefore an essential AML technology audit solution for FIs to ensure they meet stringent regulatory requirements and that their AML processes are watertight.

Red Flag Tests is also used by Regulators as an integral part of a Thematic Review to test the performance of the transaction monitoring systems used by their regulated entities. 

Find out more about Red Flag Tests here.