What is understood by the term ongoing monitoring in the financial world? The team at GCS Malta discuss this further in the below article.
What is Ongoing Monitoring?
Ongoing monitoring is the continuous scrutiny of business relationships. It is a crucial process because, while occasional transactions may not initially present as suspicious, they may form part of a pattern of behaviour over an extended period, revealing a change in a risk profile or business relationship. Ongoing monitoring varies according to the type of financial institution. According to the implementing procedures of the CSP sector by the FIAU, continuous monitoring of a business relationship is conducted only if the information documents and any relevant data are kept up-to-date, and the transactions are scrutinised. These activities may be detected from irregular transactions, which may not reflect the client’s source of wealth.
In fact, the FIAU states that ‘the level of ongoing monitoring will inevitably depend on the customer’s risk profile of the customer, but even in low-risk situations, there must be a degree of oversight to ensure that the business relationship still warrants to be considered as a low risk one. A change in circumstances may lead to an eventual re-evaluation of the risk the licensee is exposed to and intensify the CDD measures undertaken.’
Carrying out Ongoing Monitoring
Transactions are monitored throughout the business relationship to ensure that the client’s risk profile matches their behaviour. If a customer has a transaction history, it should be checked and have access to transaction details such as its purpose and nature. In addition, details such as processing time and interested parties should not be ignored. This process is made up of two categories (i) scrutinising transactions throughout the business relationship to ensure they are consistent with what you know about the customer, their business and risk profile and (ii) undertaking reviews of existing records and keeping the documents or information obtained to apply CDD measures.