A transaction monitoring system (TMS) is a tool that helps financial institutions detect and report suspicious activities related to money laundering, terrorist financing, and other financial crimes. A TMS needs to be implemented carefully and effectively to ensure its accuracy, reliability, and compliance with regulatory requirements.
One of the best practices for implementing a TMS is to perform systems integration testing (SIT) at key steps of development and user acceptance testing (UAT) prior to going live with the TMS. SIT is a process of verifying that the TMS can interact with other systems and data sources correctly and efficiently. UAT is a process of validating that the TMS meets the functional and operational expectations of the end-users and stakeholders.
By conducting SIT and UAT, the financial institution can identify and resolve any issues or defects in the TMS before it is deployed in the production environment. This can help avoid potential problems such as data quality issues, false positives, false negatives, system errors, performance issues, and regulatory breaches.
Performing SIT and UAT can also help ensure that the TMS is aligned with the financial institution's risk assessment, policies, procedures, and controls.
References:
Step 1 - Transaction Monitoring Implementation Best Practices
Anti-money laundering transaction monitoring system implementation considerations ACAMS CAMS Certification Study Guide 6th Edition

Trade-based money laundering (TBML) involves manipulating trade transactions to move illicit funds rather than goods. One common technique is over-invoicing, where an exporter intentionally inflates the invoice value of goods. In this scenario, an England-based exporter would over-invoice a shipment to Cyprus. By doing so, the exporter creates a surplus amount that can be transferred back to the terrorist organization in England, effectively disguising the movement of illicit funds12.
References:
Trade-Based Money Laundering Techniques to Know
Money Trails Of Deceit: Understanding Techniques Of Trade-Based Money Laundering Sanction Scanner: What is Trade-Based Money Laundering (TBML)?

account opening documents and account statements are examples of supporting documentation that can help the law enforcement agency to verify the identity, profile, and activity of the customer involved in the suspicious transaction. These documents can provide useful information such as the customer's name, address, date of birth, identification number, occupation, source of funds, transaction history, and beneficiaries. These documents can also help to establish the baseline of normal and expected activity for the customer, and to identify any deviations or anomalies that may indicate money laundering, fraud, or other criminal activities.
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Suspicious Activity Report Supporting Documentation, section "What Constitutes Supporting Documentation", paragraph 2: "Supporting documentation may include, for example, transaction records, new account information, tape recordings, e-mail messages, and correspondence." Documentation Requirements: Suspicious Activity Report Supporting Documentation, section "SARs Documentation Requirements", paragraph 2: "Keep all documents with evidence of the background, the purpose of the transactions, the trigger, the investigation carried out, and all findings and conclusions." BSA/AML Manual, section "Assessing the BSA/AML Compliance Program - BSA Compliance Officer", paragraph 3: "The BSA compliance officer is responsible for ensuring that the bank's BSA/AML compliance program is implemented effectively, including timely updates in response to changes in regulations or business activities, and for managing all aspects of the BSA/AML compliance program. The BSA compliance officer is also responsible for ensuring that the bank's BSA/AML compliance program is communicated to all personnel and that adequate training is provided to appropriate personnel."

According to the Wolfsberg Anti-Money Laundering Principles for Private Banking (2012), the bank should have a clear policy on how to deal with intermediaries, such as lawyers, accountants, trust and company service providers, or other financial institutions, that introduce or manage clients on behalf of the bank. The policy should reflect the following aspects1:
* The bank should perform due diligence on the intermediary itself, including its ownership, reputation, regulatory status, and AML policies and procedures.
* The bank should obtain the identity and beneficial ownership information of the clients introduced or managed by the intermediary, and verify them using reliable and independent sources, unless there are legal or regulatory impediments to do so.
* The bank should assess the level of due diligence performed by the intermediary on its clients, and determine whether it is equivalent or comparable to the bank's own standards. If not, the bank should perform additional due diligence on the intermediary's clients, or decline to accept them.
* The bank should monitor the transactions and activities of the clients introduced or managed by the intermediary, and report any suspicious or unusual activity to the relevant authorities.
Option B is consistent with these aspects, as it states that the bank must obtain the same type of information with respect to an introduced client that would otherwise be obtained by the bank, absent the involvement of the intermediary. This ensures that the bank has a sufficient understanding of the client's identity, source of wealth, and risk profile, and can apply appropriate AML measures.
Option C is also consistent with these aspects, as it states that where an intermediary manages assets on behalf of a number of clients and is the account holder with the bank, but that intermediary does not conduct the same level of due diligence as the bank, it is necessary for the bank to undertake due diligence on the intermediary's clients. This ensures that the bank does not rely solely on the intermediary's due diligence, and can identify and mitigate any potential money laundering risks associated with the clients.
Option A is not consistent with these aspects, as it states that when an intermediary introduces clients to the bank, it is not necessary for the bank to perform due diligence on the intermediary's clients. This contradicts the principle that the bank should obtain and verify the identity and beneficial ownership information of the clients introduced by the intermediary, unless there are legal or regulatory impediments to do so.
Option D is also not consistent with these aspects, as it states that where an intermediary manages assets on behalf of a number of clients and arranges for the opening of accounts for its clients with the bank, and that intermediary is a financial institution subject to similar regulations, it is necessary for the bank to perform due diligence on the intermediary's clients. This contradicts the principle that the bank may rely on the due diligence performed by the intermediary on its clients, if the intermediary is a regulated financial institution that applies equivalent or comparable AML standards to the bank, and if the bank has access to the relevant information and documentation.
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1: Wolfsberg Anti-Money Laundering Principles for Private Banking (2012), Section 3: Intermediaries

The individual responsible for setting the anti-money laundering software parameters should recommend ensuring that the alert parameters are based on risk, rather than on default software rules. This means that the software should be configured to generate alerts only when transactions or customers exhibit a high level of risk, based on factors such as the source and destination of funds, the amount and frequency of transactions, the type and purpose of the account, the customer profile and behavior, and the presence of any red flags or indicators of money laundering or terrorist financing. By aligning the alert parameters with the risk assessment of the financial institution, the software can reduce the number of false positives and focus on the most relevant and suspicious cases, thus improving the efficiency and effectiveness of the anti-money laundering staff.
:
Setting AML Transaction Monitoring Thresholds 1, ComplyAdvantage, 2020.
Machine learning techniques for anti-money laundering (AML) analysis: a survey 2, Springer, 2018.
Anti Money Laundering (AML) Definition: Its History and How It Works 3, Investopedia, 2021.