Operations Monitoring

By: Roberto Morales, Compliance Manager

It is important to remember that an Anti-Money Laundering (AML) compliance program consists of several key processes, one of which is Transaction Monitoring. This process involves identifying unusual transactions and, following an appropriate analysis, determining whether they should be classified as suspicious.

To this end, institutions should establish policies, guidelines, and procedures for the continuous monitoring of transactions conducted by their customers, with the objective of promptly identifying unusual transactions that may be linked to money laundering, the laundering of assets, or the financing of terrorism, in accordance with the applicable laws and regulations of the Republic of El Salvador.

Where, following the appropriate analysis, no reasonable justification can be established or indicators of Money Laundering or Terrorist Financing (ML/TF) are identified, the transaction shall be classified as suspicious by the Compliance Officer for the preparation and submission of a Suspicious Transaction Report (STR) to the Financial Intelligence Unit (FIU), within the timeframes established by applicable law.

This policy applies to all transactions, products, services, delivery channels, and customers, regardless of the transaction amount, payment method, or frequency. It covers in-person, non-face-to-face, electronic, and cash transactions, including those conducted through third parties.

The institution shall maintain a customer profile for each customer, which shall include, at a minimum:

• Declared economic activity.
• Source and intended use of funds.
• Expected transaction volume and frequency.
• Products and services utilized.
• Related jurisdictions.

This customer profile shall serve as the basis for assessing the consistency and reasonableness of the customer's transactions. However, the institution may request additional information regarding one or more transactions whenever deemed necessary.

Monitoring Methods

Automated Monitoring Where the institution has technological capabilities in place, it shall implement systems that enable it to:

• Detect transactions that fall outside normal operating parameters.
• Generate automated alerts.
• Record and retain the information analyzed.

Manual Monitoring: In the absence of automated systems, transaction monitoring shall be conducted manually through:

• Periodic review of operational reports.
• Analysis of significant transactions.
• Verification of cash transactions and unusual transactions.
• Independence in the Submission of Reports

Red Flags

Personnel shall identify, among others, the following red flags:

• Transactions that are inconsistent with the customer's profile.
• Unusual increases in transaction amounts or frequency.
• Repeated use of cash without a legitimate economic justification.
• Structuring (smurfing) of transactions.
• Involvement of third parties with no apparent relationship to the transaction.
• Transactions involving high-risk jurisdictions.

The identification of a red flag does not automatically require the filing of a Suspicious Transaction Report (STR). However, it does require a thorough analysis, and the results of such analysis shall be documented and retained, regardless of whether the transaction is ultimately reported.

Please remember that the continuous execution of this monitoring function is of critical importance and must be carried out using a risk-based approach, while ensuring at all times the strict confidentiality required for such analyses.