Fraud rarely arrives as a single, obvious red flag anymore. Instead, it flows through routine payments, carefully disguised as normal customer activity, and the cost of letting it through can be steep.
According to AiPrise, for banks, payment providers, FinTechs, and crypto platforms, every approved transaction can represent both revenue and risk—especially when criminals are testing controls repeatedly and adapting faster than traditional defences can keep up.
The challenge is accelerating. Federal Trade Commission figures referenced in recent reporting show consumers reported losing more than $12.5bn to fraud in 2024, a 25% increase on the year before. As transaction volumes grow and payment rails move faster, the room for manual intervention shrinks. That combination gives bad actors more opportunities to probe weak points, exploit delays, and route funds through a chain of seemingly legitimate movements before a team can react.
That is exactly why the distinction between transaction screening vs transaction monitoring matters. While both are core elements of anti-money laundering and counter-terrorist financing (AML/CFT) programmes, they operate at different moments in the transaction lifecycle and look for different types of risk. Treating them as interchangeable—or leaning too heavily on one—can create blind spots that criminals are happy to exploit.
Transaction screening is typically the preventive layer. It reviews transactions before they are approved or executed, with the goal of identifying and blocking activity that may be prohibited, fraudulent, or otherwise high risk. In practice, it checks key transaction data—such as sender, receiver, and payment details—against sanctions lists, politically exposed persons (PEP) databases, and other AML watchlists. Where a match or risk indicator appears, the payment may be stopped entirely or flagged for investigation before funds move.
From a compliance perspective, screening supports customer due diligence (CDD) and broader AML/CFT controls by helping firms prevent exposure to sanctions breaches, money laundering, terrorist financing, proliferation financing, corruption, and related threats. Strong programmes tend to share a few fundamentals: screening before approval or settlement, using frequently updated global watchlists and sanctions data, incorporating internal risk signals alongside external sources, and presenting clear risk indicators to support consistent decisions.
Transaction monitoring, by contrast, is designed to identify risk that only becomes visible through behaviour over time. It reviews completed and processed transactions—often in real time and retrospectively—to detect suspicious patterns, not just suspicious parties. By analysing activity against expected customer profiles, it can highlight anomalies such as unusually large transactions, behaviour inconsistent with a customer’s risk rating, rapid movement of funds across accounts or jurisdictions, and activity involving high-risk countries, products, or channels.
The difference becomes clearer with a practical example. A criminal may use a seemingly legitimate business to move funds through multiple accounts to obscure their origin. Transaction screening might not flag those payments if no sanctioned parties appear in the data. Transaction monitoring, however, can detect the unusual pattern—abnormal velocity, sudden volume shifts, or repeated routing behaviours—and trigger alerts for investigation.
For regulated firms, neither control is optional. Together, screening and monitoring can stop prohibited activity early, surface evolving risks, and reduce harm to customers, while also lowering exposure to enforcement action and reputational damage. When controls fall short, the consequences can include regulatory fines, increased scrutiny from regulators and banking partners, missed suspicious activity reports (SARs), and lasting damage to customer confidence. Regulators also expect timely detection and reporting, and delays can create serious legal exposure.
To keep programmes effective, organisations should regularly stress-test their approach. Are high-risk alerts prioritised well, including where AI is used? Do manual reviews slow investigations or obscure context? Is the system drawing on both internal and third-party data to improve accuracy? Are sanctions lists and watchlists updated quickly after changes? As these questions are reviewed, reliable, up-to-date screening capabilities remain essential for identifying sanctioned entities, PEPs, and adverse media exposure early—and exploring AiPrise’s foolproof watchlist screening may help strengthen controls while reducing manual effort and alert fatigue.
Copyright © 2026 RegTech Analyst
Copyright © 2018 RegTech Analyst
