What is a Rules Monitoring Dashboard

As you know, a transaction monitoring system has several rules which every transaction goes through to obtain a score, and this core determines whether a transaction is good or if a manual review is required to determine the genuineness in the transactions. Being a consultant, I have seen rules which were live in a client’s system for months if not years and the rule had not detected a single fraud, or the number of false positive alerts were close to 100% and no one would even notice that the rule is significantly underperforming.

Having a rules monitoring dashboard keeps a tab of how rules are performing, adjust and optimize rules and measures the effectiveness of financial crime rules.

A centralized dashboard provides the institution with a snapshot of key metrics related to rule performance, alert volumes, and operational efficiency. It helps reduce false positives, fine-tune fraud detection mechanisms, and ensures a risk-based approach to monitoring. Additionally, the dashboard can act as a powerful communication tool between compliance teams, fraud detection units, operations teams and senior management, ensuring alignment and transparency.

What Should Be Included in the Dashboard?

The effectiveness of a Rules Monitoring Dashboard depends largely on its content. Below are essential elements that should be included:

• Rule Performance Metrics: These measure the effectiveness of individual rules. Metrics could include the number of alerts triggered by each rule, the value of these alerts triggered, confirmed fraud capture rates, the percentage of those alerts that lead to Suspicious Activity Reports (SARs), and the false positive rates.
• Alert Volume/Value by Rule: This provides a clear understanding of how many alerts and the value of alerts generated per rule and which rules are causing spikes in alerts. It can indicate if a rule needs to be refined or if certain patterns are being overlooked.
• Confirmed Fraud Rate: This provides how many of the alerts generated can with a degree of certainty confirmed to be fraudulent.
• False Positive Rate: This KPI shows how many alerts are being generated but don’t result in meaningful action. A high false positive rate can burden the investigative team, making the system less efficient.
• Rule Health Status: A color-coded indicator showing whether each rule is functioning correctly, requires review, or is outdated.
• Investigative Outcomes: This includes the number of alerts escalated to investigations, the number of closed cases, and those flagged for further review. It can help monitor the productivity and effectiveness of investigative teams.
• Rule Modification History: A log showing recent changes to rules, including updates or deactivations, ensuring that any adjustments are tracked and auditable.

Key Performance Indicators (KPIs) to Include

Key Performance Indicators (KPIs) are critical to measuring the effectiveness of the rules and the overall anti-financial crime program. Some important KPIs to include are:

• Alert-to-SAR Ratio: The percentage of alerts that result in SAR filings. A high ratio suggests that the rules are accurate and effectively flagging suspicious activities.
• False Positive Rate: The proportion of alerts that turn out not to be suspicious, which can help optimize the system to focus on more accurate detection.
• Alert Volume per Analyst: Tracks the workload for each analyst and ensures an even distribution of work across the team.
• Alert Volume per Rule: Monitors which rules are generating the most alerts and whether they are contributing to detecting financial crime effectively.
• Rule Effectiveness: Measures how often rules correctly identify suspicious behaviour versus generating false positives.

Who Should Be Included in the Stakeholders List Receiving This Dashboard?

The stakeholders who should receive the dashboard include:

• Compliance Officers: To ensure the FI meets all regulatory requirements and fine-tunes the rules as necessary.
• Fraud and AML Analysts: To help them track alert volumes and monitor rule effectiveness.
• Senior Management: To provide oversight and ensure resources are allocated efficiently.
• Financial Crime Operations: Manual investigators or agents will understand rules which are leading to high false positive rates and other operational metrics.
• IT Engineering Teams (If in-house): To track system performance, troubleshoot issues, and support rule adjustments.
• Legal and Regulatory Teams: To ensure that all actions align with local and global regulatory requirements.

Sample rules monitoring dashboard layout and inclusions

* The numbers above are not actual numbers and do not contain any mathematical accuracy.

Should You Include All Rules or Only a Few?

In a rule monitoring dashboard, including all rules might overwhelm the system and its users. Instead, it’s more effective to prioritize and include key rules that are:

• High-Risk: Rules that monitor transactions and behaviours tied to high-risk activities, such as large international transfers or transactions involving high-risk jurisdictions.
• Frequent Alerts: Rules that frequently generate alerts and require close monitoring to avoid overwhelming the investigation team.
• Critical to Compliance: Rules tied directly to regulatory requirements, such as those for sanction screening or PEP monitoring.

You might also include all rules and offer a filter criterion which might allow users to filter rule categories or provide an option to customise the dashboard with further criteria. Also please note that few rules that generate minimal alerts or are of lower importance can be reviewed less frequently or managed separately, reducing clutter in the dashboard.

Conclusion

So would you agree that a well-structured Rules Monitoring Dashboard helps out to manage and monitor AML and fraud prevention rules effectively. By including the right elements, stakeholders, and KPIs, financial institutions can ensure that their systems remain agile, compliant, and efficient in the fight against financial crime.

If you feel that I missed out on any key KPI which I haven’t included here, please feel free to comment or share.