How would you design an AML transaction monitoring system?
A core Risk & Compliance interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
(1) Define detection rules based on risk assessment: threshold-based (large cash), pattern-based (structuring), behavioral (deviation from profile). (2) Calibrate rules to minimize false positives while maintaining detection effectiveness. (3) Implement alert investigation workflow: L1 triage, L2 investigation, L3 escalation/STR. (4) Track metrics: alert volume, false positive rate, SAR conversion rate, investigation time. (5) Regular tuning: quarterly review of rules based on new typologies and regulatory guidance.
WHAT INTERVIEWERS LISTEN FOR
- ✓Risk-based detection rules
- ✓False positive calibration
- ✓Alert investigation workflow
- ✓Performance metrics tracking
- ✓Regular rule tuning
COMMON MISTAKES
- ✗Only threshold-based rules
- ✗Ignoring false positive rate
- ✗No escalation process
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