What does 'Transaction Monitoring' mean?

Transaction Monitoring in the context of Anti-Money Laundering (AML) refers to a feature within software that continuously tracks and analyzes financial transactions to detect suspicious or unusual activities that may indicate money laundering or other illicit financial behavior. The software reviews transaction patterns, customer profiles, and triggers alerts based on predefined rules or thresholds, such as large or rapid movements of funds. This feature is crucial for identifying potentially fraudulent activities in real-time, enabling organizations to respond quickly. By automating transaction monitoring, businesses can enhance compliance, improve efficiency, and reduce the risk of financial crime.