Transaction monitoring in AML refers to tracking financial transactions to detect suspicious behaviour. It helps prevent money laundering, terrorism financing and fraud by analysing real-time or historical customer activity as per regulatory requirements.

A risk-based approach means assessing customer and transaction risks individually. High-risk activities receive stricter monitoring, while low-risk ones follow simplified checks, ensuring efficient resource use and better compliance with AML regulations.

Red flags include unusual transaction amounts, frequent cash deposits, mismatched customer profiles, rapid fund transfers and transactions linked to high-risk countries. These warning signs help identify potential money laundering or terrorist financing activities requiring investigation.

Transaction monitoring analyses transactional behaviour to detect unusual activities. Name screening checks customer names against sanctions lists, PEP lists and watchlists. Both serve different but complementary roles in identifying suspicious transactions and ensuring AML compliance.

Record-keeping ensures all customer identities, transactions, investigations and SAR filings are properly documented. It supports regulatory audits, strengthens AML compliance, improves transparency and helps financial institutions justify decisions and investigations when required.