The cryptocurrency market is rising day by day, and many countries are establishing regulatory frameworks for transactions. Financial institutions that deal with cryptocurrency must monitor the transactions, the origin, and destination of funds, and file suspicious activity reports (SARs) if they find any suspicious activity or unusual behavior.

Real-time transaction monitoring is the process of monitoring and keeping records of transactions that happen in real-time on blockchains. It allows financial institutions to keep records of transactions, verify the origin and destination of funds, and determine the possible relationship with money laundering. The main difficulty cryptocurrencies face is regulating or limiting the movement of blockchain. To achieve compliance, cryptocurrency businesses must adhere to all applicable legal requirements and be vigilant about any new constraints that may be introduced.

Real-time transaction monitoring Regulations

The transaction screening process monitors transactions continuously, sets alarms for suspicious transactions, and sends these alarms to the compliance team. Then the compliance team checks those alarms and reports to regulatory authorities if anything seems fishy.

Businesses in digital currency should spend money on new real-time transaction monitoring system for advanced monitoring as cryptocurrency becomes a legitimate payment option. With advanced real-time transaction monitoring applications, companies can 

  • Monitor transactions easily 
  • Risk scoring can reduce costs and false positives 
  • Time-saving 
  • Receive and respond to alarms
  • Analyze and monitor accounts that trade with each other
  • Share information easily.

Best Practices for Monitoring Cryptocurrency Transactions 

Real-time transaction monitoring acts as a shelter for safe payment processing. Here are the best practices for implementing real-time transaction monitoring:

Implement a Robust Risk Assessment Framework

Businesses should implement a robust and automated risk assessment method to monitor transactions. This method analyzes the risks involved in cryptocurrency transactions and the customers involved. Companies should use a risk-based approach to identify high-risk customers and transactions. A robust risk assessment method monitors the transactions and accepts or rejects the application according to it.

Utilize Machine Learning And Sophisticated Analytics

Businesses can monitor large, real-time transactions by utilizing advanced analytics and machine learning. These processes can automate real-time transaction monitoring. Machine learning analyzes the patterns and signals that may indicate fraudulent activities. Businesses can use these patterns to analyze suspicious activities.

Implement KYC/AML Compliance 

Implementing robust Know Your Customer (KYC) and anti-money laundering (AML) regulations ensures that customers are verified and identified before accessing accounts or making transactions. The process involves gathering information from customers and applying validation checks.

Monitor Cryptocurrency Exchanges

Cryptocurrency exchanges are a bridge of entry for black money into the system. So, effective businesses should monitor transactions, and businesses should keep an eye on new advancements in the cryptocurrency market and real-time transaction monitoring solutions to provide modern solutions to modern problems.

Implement A Risk Based Approach To Customer Due Diligence 

Businesses should implement a risk-based approach to customer due diligence effectively. The risk-based approach identifies the risk associated with transactions and allocates resources accordingly. This involves collecting additional information, like the source of funds, from high-risk customers to check the severity of the risk.

Implementation Of Real-time Transaction Monitoring Tools 

Implementing tools for monitoring can automate the real-time transaction monitoring process. The tools are used to analyze transaction patterns and set or deliver alarms when suspicious activity occurs. These tools assist businesses in tracking and keeping records of transactions.

Train Staff On Cryptocurrency Transactions 

Real-time transaction monitoring is difficult to understand; it is a complex process with advanced technologies and tools. Businesses should provide training to their staff on real-time transaction monitoring. This training should cover topics such as detecting suspicious activity, assessing risk factors, setting alarms, and mitigating transaction-related risks. By doing so, businesses can achieve improved results in their transaction monitoring efforts.

Collaboration With Regulatory Authorities 

Businesses should collaborate with other businesses and regulatory authorities to monitor transactions efficiently. They should work cooperatively with regulatory authorities to report or send signals of suspicious activities to law enforcement agencies so they can take legal action against those involved in them or reject the transaction request. Real-time transaction monitoring suspicious activity reports (SARs) should be stored for future editing.

To Wrap Things Up 

To prevent the entry of black money into the financial system via cryptocurrency exchanges, it is crucial to implement robust real-time transaction monitoring. This monitoring system should analyze transactions effectively, detecting any suspicious activities that may arise. By setting alarms for such activities, the process ensures enhanced security for transactions and safeguards the reputation of the company.