Money laundering makes up about 2 to 5% of the world’s total economic activity. It often uses the same banking systems that process regular payments, such as salaries and rent. In 2024, TD Bank was penalized over $3 billion after regulators found that its transaction-monitoring system was insufficient to detect money laundering. A fine of £44 million was charged by the Financial Conduct Authority on Nationwide Building Society in the UK for having similar gaps. Both banks used monitoring software, but their systems were not designed to handle the high volume of modern transactions.
Why the Old Model of Monitoring Is Running Out of Time
For several years, the transaction monitoring process was done in batches. A system would check the day’s transactions overnight, flag anything unusual, and give the list to an analyst the next morning. This approach worked when payments took a day or two to clear; however, it is less effective now. The European Union’s Instant Payments Regulation requires euro transfers to complete within 10 seconds. In November 2025, the United States increased FedNow’s transaction limit from $1 million to $10 million, turning a simple payment system into a business tool. A transaction that clears in seconds cannot wait for the next day’s review. According to recent industry market analysis, real-time payments will grow by 46.7% each year from 2024 to 2029. Monitoring systems based on past transactions cannot keep up with the money that moves today.
Alert Volume Is a Bigger Problem Than Most Teams Admit
It is estimated that 95% of the alerts generated by traditional anti-money laundering (AML) transaction monitoring systems are false positives. This number has remained the same in the industry for years, which is why compliance teams keep growing without finding more crime. Every real case gets lost in a sea of routine alerts that happen just because a customer moves a bit more money than usual. The best transaction monitoring software now scores transactions based on a customer’s typical behavior instead of just a fixed dollar amount. This approach reduces irrelevant alerts while still providing effective coverage.
Coverage Now Has to Extend Across Borders and Asset Types
A monitoring system that follows one country’s rules can struggle when a business opens accounts in other countries. Suspicious activity reporting deadlines, structuring thresholds, and sanctions lists all differ by jurisdiction, and stablecoins have added another layer entirely. The U.S. law passed in 2025 requires all stablecoin issuers to follow AML rules. Also, the Financial Action Task Force’s Travel Rule requires that virtual asset providers share sender and recipient information with each transaction. A transaction monitoring provider focused only on traditional banking is already lagging behind in the crypto space. Similarly, a provider that meets just one jurisdiction falls short as soon as a business operates across borders.
Regulators Are Treating Weak Monitoring as a Provable Failure
The fines are not just a solo case; in 2025, Robinhood Markets agreed to pay $29.75 million for failing to meet AML requirements. Regulators now expect companies to show that their monitoring works in real transactions. It is not just about explaining it in a compliance manual, and a written policy is no longer sufficient. Inspectors want proof that alerts relate to actual issues and that the system can justify its decisions when questioned. The best transaction monitoring software providers today must withstand this kind of scrutiny, not just pass an initial evaluation.
Building a Monitoring Program That Matches Today’s Payment Speed
Financial crime is growing faster than many compliance teams can keep up with. As payment systems speed up, the gap between crime and the ability to monitor it widens. To address this, it is important to have a solution that combines behavior-based detection, real-time scoring, and coverage across different areas and asset types. It is also important that this system can show regulators how it works.
Tools like AML Watcher are designed to score transactions based on a customer’s behavior instead of using a set threshold. It continuously updates data on sanctions, politically exposed persons (PEPs), and watchlists, rather than doing it on a fixed schedule. This system works across many countries, allowing a single setup to meet different reporting rules without requiring separate solutions for each country. Each alert includes its own case history and audit trail, providing analysts with context to take action and regulators with a clear record to review. Checking the current setup against recent fines can quickly show whether it works well or is falling behind in the fast-changing world of payments.
