Transaction Monitoring & Reporting Playbook
Core AML Program Pillar – Detection, Escalation & Regulatory Reporting.
The Customer Onboarding & CDD/EDD Playbook establishes the Bank’s risk-based framework for identifying, verifying, and understanding customers and beneficial owners. It ensures that the institution’s onboarding processes comply with the Bank Secrecy Act (BSA), FinCEN CDD Rule (31 CFR 1010.230), and global AML standards, while supporting a seamless client experience.
This Playbook provides standardized procedures for customer identification, risk scoring, and enhanced due diligence, ensuring consistent application across jurisdictions, business lines, and customer types. It integrates governance oversight, automated screening, and continuous monitoring to ensure the integrity of the Bank’s client base.
It serves as the foundation for managing AML risk exposure during onboarding and supports ongoing risk management efforts throughout the customer lifecycle.
Overview of Transaction Monitoring
Transaction monitoring is a core pillar of the Bank’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) program and a foundational element of the institution’s regulatory compliance, risk management, and client-protection strategy. It encompasses the policies, procedures, technologies, and investigative workflows that enable the Bank to detect, investigate, escalate, and report suspicious financial activity in accordance with applicable laws and regulatory expectations.
The Bank operates at the intersection of cutting-edge financial technology and the asset-management ecosystem. Unlike traditional commercial banks with broad retail or lending portfolios, the Bank is purpose-built to serve fund managers, administrators, and institutional clients. The transaction monitoring function is therefore designed to reflect the complexity, velocity, and cross-border nature of transactions in the funds industry, including subscription and redemption flows, investment distributions, and custody transfers, while still meeting or exceeding global regulatory standards.
By leveraging advanced analytics, data integrity controls, and automated detection scenarios, the Bank’s transaction monitoring program ensures that suspicious behavior, whether it arises from structuring, layering, sanctions evasion, trade-based money laundering, or misuse of fund vehicles, is promptly identified, investigated, and reported. This proactive approach protects the institution, its clients, and the integrity of the global financial system.
Objectives of the Playbook
The purpose of this playbook is to serve as the definitive operational guide for how the Bank detects, investigates, escalates, and reports suspicious activity. It provides a comprehensive framework for staff across the three lines of defense — from analysts and investigators to compliance officers and board committees — to understand their roles, follow consistent procedures, and maintain alignment with regulatory expectations and enterprise risk appetite.
Specifically, the objectives of this playbook are to:
o Establish a clear, risk-based framework for monitoring transaction activity across all Bank products, services, and geographies.
o Define the end-to-end workflow for alert generation, review, escalation, case management, and regulatory reporting.
o Outline the governance structure that ensures accountability, oversight, and continuous improvement of the monitoring program.
o Provide operational standards and documentation requirements that support regulatory examinations, internal audits, and law-enforcement investigations.
o Embed feedback loops and performance metrics that drive scenario tuning, model optimization, and strategic decision-making.
o This playbook is both a training tool for new personnel and a reference manual for experienced investigators and auditors. It ensures consistency, defensibility, and transparency across every stage of the monitoring and reporting lifecycle.
Regulatory Expectations (FFIEC, FinCEN, FATF, etc.)
The Bank’s transaction monitoring framework is designed and maintained in alignment with the requirements and expectations of U.S. and international regulatory authorities. At a minimum, the program adheres to:
Bank Secrecy Act (BSA) and its implementing regulations under 31 C.F.R. Chapter X, requiring financial institutions to detect and report suspicious activity and file Currency Transaction Reports (CTRs).
FinCEN Guidance and Advisories, including red-flag typologies, SAR narrative expectations, and evolving threats in areas such as sanctions evasion, trade-based money laundering, and virtual assets.
FFIEC BSA/AML Examination Manual, which establishes best practices for risk-based monitoring, alert investigation, SAR decisioning, and independent testing.
FATF Recommendations, particularly those addressing customer due diligence, transaction monitoring, recordkeeping, and cross-border information-sharing.
Applicable OCC, SEC, and FINRA guidance where relevant to the Bank’s products and institutional client base.
In addition, the monitoring program is structured to support law-enforcement collaboration, Section 314(a) information-sharing, and voluntary 314(b) partnerships, ensuring the Bank contributes meaningfully to the broader financial intelligence and national security ecosystem.
Applicability & Scope (lines of business, products, geographies)
This playbook applies to all Bank products, services, and jurisdictions where the institution operates or facilitates transactions, including:
Subscription and redemption accounts for investment funds
Custody and settlement transactions
Payments, transfers, and disbursements initiated by or on behalf of asset managers and administrators
Digital platform transactions processed via Sphere, the Bank’s client portal
Cross-border flows involving correspondent banks, custodians, or third-party administrators
The playbook applies across the three lines of defense and to all employees, contractors, and third-party service providers engaged in activities that support transaction processing, alert generation, investigation, or reporting. It is also relevant to senior management, board committees, and auditors who oversee program governance and performance.
Roles & Responsibilities Across the Three Lines of Defense
Transaction monitoring and reporting is a shared responsibility across the organization, with clearly defined roles for each line of defense:
First Line of Defense – Business & Operations: Responsible for executing day-to-day processes, ensuring data quality, adhering to alert investigation procedures, and escalating unusual activity promptly.
Second Line of Defense – Compliance & Financial Intelligence Unit (FIU): Owns the transaction monitoring framework, defines scenarios and thresholds, oversees investigations, makes SAR determinations, and ensures timely regulatory reporting.
Third Line of Defense – Internal Audit: Provides independent assurance of the design and effectiveness of transaction monitoring and reporting controls, validates program alignment with regulatory expectations, and recommends improvements.
These functions are supported by senior management and board committees, which provide strategic direction, review program performance metrics, approve material changes, and ensure the program remains resourced, risk-aligned, and compliant with applicable laws and regulations.
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