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BlogAMLAre Debit Card transactions flying under your firm’s AML radar?

Are Debit Card transactions flying under your firm’s AML radar?


Written by Don Lee

All broker dealers have AML requirements and AMLCOs monitor transactions for ‘red flags’ based on their firms AML procedures. Most firms focus on wire movements and other standard red flags most of which are born out of the old NASD small firm’s template or recommended by compliance consultants. Many of these red flag rules are written broadly and may not specifically address the use of Debit Cards. For example, a firm may have a broad red flag such as ‘deposits and subsequent withdrawals outside of the customer’s investment objective’; most firms monitor for wires and checks, which are things that have to be approved, but what about debit cards? Using this red flag example , there would be an issue if a customer deposits a wire and just uses the debit cards to withdraw the funds.

Many firms today provide debit cards to their clients as an added bonus and hook providing ‘full service’ to the client. Clients see debit cards as easy access to their free cash for purchases. Some clients however use debit cards just to withdraw funds. Many clearing firms don’t include debit card transactions on their AML reports, meaning that the AML department will not see these debit card withdrawals and account depletion. I have had several experiences ‘negotiating’ with clearing firm’s General Counsel, AMLCOs and other members of the executive management to get debit card transaction reports to monitor them. After much push back from the clearing firm I was able to get these reports; but this got me thinking of how many firms are actually doing this and reviewing debit card transactions as part of their AML process. Many of the red flags that exist today include debit card transactions and you may be surprised if you look at your firm’s debit card transaction report to see how many clients are using their debit cards for ‘ATM Withdrawals’ flying completely under the firm’s AML radar.

Obtaining valuable debit card information from the clearing firm leads to another problem … reviewing the data. Many firms are already under pressure reviewing their firm’s transaction data manually. Adding debit card transaction information increases the load and burden on these manual processes. Firms should consider using technology to help find patterns and exceptions to enhance their AML program. The amount of data that has to be analyzed and processed is a daunting task, and if done manually increases the risk of errors and missing suspicious activity. Regulators are already using Big Data analytics in their examinations and risk based reviews of firms; firms should be using data analytics to minimize the regulatory risk of their firms.

The standard of ‘reasonable’ has been highly elevated by regulators with reasonableness being subjective. Compliance automation software such as FinWebTech’s Catalyst application can help firms muddle through the analysis of their clearing firm data to identify patterns and exceptions giving firms, CCOs and AMLCOs added peace of mind without breaking the bank.

About FinWebTech

FinWebTech is a service as a software (SaaS) development company creating web applications to solve the growing needs of financial services firms. FinWebTech’s first product is Catalyst, an automated compliance solution for the securities industry.  Catalyst provides firms with: Transaction Surveillance for AML and Suitability;  Risk Assessments and Management; Supervisory Controls and Audit Logs, KYC, Document Repository and other tools to assist compliance departments manage their programs and reduce risk. Catalyst is priced to give small to medium sized firms access to compliance technology.

For more information on FinWebTech and Catalyst, please contact Don Lee at or 305-409-1307

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