What is an AML alert?

An AML alert is a signal indicating that specific customer activity, a transaction, a screening result, or another event requires additional analysis from the perspective of money laundering or terrorist financing risk. An alert may be generated automatically by a system or monitoring rule, but it may also result from an employee’s observation, new information about the customer, or a change in the circumstances of the relationship.

However, the mere generation of an alert does not mean that money laundering has occurred, that the transaction is suspicious, or that GIIF must automatically be notified. The significance of an alert can only be determined after analysing the data, the customer profile, the history of the relationship, and the context of the event. An alert is a signal for analysis, not a ready-made AML decision.

Where can an AML alert come from?

“AML alert” is a term used in operational practice. The Polish AML Act does not define an alert as a separate legal category. Alerts may arise in different parts of the AML/CFT process. In transaction monitoring, a signal may be activity that deviates from the customer’s profile, such as an unusual value, frequency, direction, or method of carrying out transactions.

In sanctions screening, an alert may indicate a potential match between a person or entity and data contained in the relevant sanctions source. During PEP screening, there may be a potential match with a person who holds or previously held a particular public position or function.

An alert may also result from other information, for example:

• a change in the beneficial owner;
• a change in the customer’s ownership or control structure;
• new information obtained during KYC or KYB;
• a change in the nature of the customer’s business activity;
• the emergence of a new risk factor;
• inconsistencies between information from different sources;
• an employee observation not detected by automated rules.

An alert should therefore not be equated solely with a notification generated by a transaction monitoring system. An alert describes the need for analysis, not the technology that generated it.

How is an AML alert analysed?

Alert analysis should lead to determining what the detected signal means in the context of the specific customer, relationship, or event.

In simplified terms, the process may look as follows:

alert → cause → customer data → relationship history → context → additional findings → assessment → decision → documentation.

First, it is necessary to determine what triggered the alert and exactly what it concerns. The signal should then be assessed against the available knowledge of the customer, their business activity, risk profile, previous activity, and the nature of the relationship. The scope of further analysis depends on the type of alert.

In the case of a transaction alert, relevant factors may include, among other things:

• the purpose and nature of the transaction;
• its value and frequency;
• the parties and direction of the flow;
• the customer’s previous activity;
• whether the transaction is consistent with the business profile;
• the economic or legal rationale for the transaction.

In the case of a sanctions alert, confirming the identity of the person or entity, analysing additional identifiers and – where necessary – the ownership and control structure may be essential. In the case of a PEP alert, it is necessary to determine whether the match concerns the correct person and which function and period of holding that function are relevant for further action. Depending on the situation, additional information or documents, an update of KYC or KYB, or a reassessment of the customer’s risk may also be required.

There is no single alert analysis checklist that is appropriate for every alert. The scope of the actions taken should correspond to what has been detected and what risk may arise from it.

What is the difference between an AML alert and a suspicion?

This is a fundamental distinction. An alert is a signal that a particular case requires review. A suspicion is the result of analysing facts and circumstances that may indicate money laundering or terrorist financing.

The correct sequence is therefore:

alert → analysis → findings → suspicion or no suspicion → appropriate action.

Not:

alert → GIIF.

An alert may be fully explained and closed without further escalation. It may also lead to enhanced analysis, a change in the risk assessment, or other actions. Only if the findings lead to circumstances specified in the AML Act may an obligation arise to apply the appropriate notification procedure or take another regulatory action. Therefore, not every alert is a suspicious transaction and not every alert should be reported to GIIF.

An alert is not a suspicion. It is information that must be analysed in order to determine whether a suspicion exists.

What can be the outcome of an alert analysis?

Alert analysis does not have to end with a choice between a “false positive” and reporting to GIIF. There are more possible outcomes. An alert may be closed without further escalation if the information collected reasonably explains its cause and does not indicate a need for additional action.

The analysis may also show that it is necessary to:

• supplement customer information;
• update KYC or KYB;
• update the customer profile;
• reassess the risk;
• obtain additional documents or explanations;
• conduct enhanced analysis of specific transactions or relationships;
• apply additional customer due diligence measures;
• escalate the case to a person with appropriate authority;
• fulfil an obligation resulting from the applicable regulations.

It is also useful to distinguish between an explained alert and a false positive. A false positive generally means that the system identified a match or event that, after verification, turned out to be apparent. However, not every alert closed without escalation is a false positive. For example, a transaction may genuinely have deviated from the customer’s previous profile but, after analysis, have been reasonably explained and considered consistent with the customer’s actual business activity.

Closing an alert does not mean that there was nothing to analyse. It should be the result of the analysis performed.

How should an AML alert analysis be documented?

A properly handled alert should leave an audit trail allowing the analysis process and the basis for the decision made to be reconstructed.

The documentation should make it possible to determine, among other things:

• what triggered the alert;
• which person, entity, transaction, or event it concerned;
• what data and sources were analysed;
• what facts were established;
• whether additional information or documents were obtained;
• how the findings were assessed in the context of the customer and their risk;
• what decision was made;
• whether any further actions were taken.

A statement such as:

“alert closed – no risk”

may not be sufficient to reconstruct the basis for the decision. The rationale should show why the detected signal was considered explained or why the case required further action. Documentation is also important when an alert does not lead to escalation. Taking no further action is also an AML decision and should have a basis that can be reconstructed.

An alert can be closed. The rationale for the decision should remain.