AML Functional Specification

System Overview

Transaction Monitoring Architecture

Real-Time Processing Pipeline:
1. Transaction Ingestion → Data Validation → Normalization
2. Customer Enrichment → Risk Scoring → Scenario Analysis
3. Alert Generation → Case Creation → Investigation Workflow
4. Decision Making → Regulatory Reporting → Audit Trail

Key Components:
- Stream Processing Engine (Apache Kafka/Apache Flink)
- Machine Learning Pipeline (TensorFlow/PyTorch)
- Rules Engine (Drools)
- Case Management System
- Regulatory Reporting Module
                

Core Data Models

Transaction Entity:
public class Transaction {
    public Guid Id { get; set; }
    public string AccountId { get; set; }
    public decimal Amount { get; set; }
    public string Currency { get; set; }
    public DateTime TransactionDate { get; set; }
    public TransactionType Type { get; set; }
    public string CounterpartyId { get; set; }
    public decimal RiskScore { get; set; }
    public List<AmlAlert> Alerts { get; set; }
}

AML Case Entity:
public class AmlCase {
    public Guid Id { get; set; }
    public string CustomerId { get; set; }
    public CaseStatus Status { get; set; }
    public CasePriority Priority { get; set; }
    public DateTime CreatedAt { get; set; }
    public string AssignedAnalyst { get; set; }
    public List<Transaction> SuspiciousTransactions { get; set; }
    public CaseDecision Decision { get; set; }
}
                

Monitoring Scenarios

Cash Structuring Detection

Business Rule:
Detect multiple cash transactions just below CTR threshold ($10,000)

Algorithm:
public bool DetectStructuring(List<Transaction> transactions) {
    var cashTransactions = transactions
        .Where(t => t.Type == TransactionType.Cash)
        .Where(t => t.Amount >= 9000 && t.Amount < 10000)
        .GroupBy(t => t.CustomerId)
        .Where(g => g.Sum(t => t.Amount) >= 10000)
        .Where(g => g.Count() >= 2);
    
    return cashTransactions.Any();
}

Thresholds:
- Individual transaction: $9,000 - $9,999
- Aggregate amount: ≥ $10,000
- Time window: 30 days
- Minimum count: 2 transactions
                

Rapid Movement Analysis

Business Logic:
Identify funds that move quickly through accounts (layering)

Detection Pattern:
if (depositAmount > threshold && 
    timeToWithdrawal < maxTime && 
    withdrawalAmount >= (depositAmount * minPercent)) {
    
    CreateAlert(AlertType.RapidMovement, 
               priority: CalculatePriority(amount, timeSpan),
               evidence: CollectTransactionChain(accountId));
}

Parameters:
- Threshold: $5,000
- Maximum time: 24 hours
- Minimum percentage: 80%
- Chain length: Track up to 5 hops
                

Risk Scoring Algorithm

Multi-Factor Risk Calculation:
public decimal CalculateRiskScore(Transaction transaction, Customer customer) {
    var score = 0m;
    
    // Amount-based risk (0-25 points)
    score += CalculateAmountRisk(transaction.Amount);
    
    // Geographic risk (0-20 points)  
    score += CalculateGeographicRisk(transaction.OriginCountry, 
                                   transaction.DestinationCountry);
    
    // Customer risk (0-25 points)
    score += customer.RiskProfile.BaseRiskScore;
    
    // Behavioral risk (0-30 points)
    score += CalculateBehavioralRisk(transaction, customer.TransactionHistory);
    
    return Math.Min(100, score);
}

Risk Categories:
- Low Risk: 0-30
- Medium Risk: 31-70  
- High Risk: 71-100

Behavioral Analysis:
var avgAmount = customer.GetAverageTransactionAmount(90); // 90 days
var deviation = Math.Abs(transaction.Amount - avgAmount) / avgAmount;
var behavioralRisk = Math.Min(30, deviation * 100);
                

Case Management Workflow

Automated Case Assignment:
public string AssignCase(AmlCase amlCase) {
    var analysts = GetAvailableAnalysts();
    var workloadScores = CalculateWorkloadScores(analysts);
    var skillMatches = GetSkillMatches(amlCase.CaseType, analysts);
    
    var bestAnalyst = analysts
        .Where(a => skillMatches.ContainsKey(a.Id))
        .OrderBy(a => workloadScores[a.Id])
        .ThenByDescending(a => skillMatches[a.Id])
        .FirstOrDefault();
        
    return bestAnalyst?.Id;
}

SLA Management:
- High Priority: 4 hours
- Medium Priority: 24 hours  
- Low Priority: 72 hours

Escalation Rules:
if (case.Priority == High && hoursOpen > 6) {
    EscalateToSupervisor(case);
} else if (case.Priority == Medium && hoursOpen > 30) {
    EscalateToSupervisor(case);
}
                

Performance Requirements

Component	Performance Requirement	Measurement
Transaction Processing	10M transactions/day	Throughput testing
Alert Response Time	< 100ms	95th percentile latency
Case Creation	< 5 seconds	End-to-end processing time
Dashboard Load	< 2 seconds	Page load time
Report Generation	< 30 seconds	Complex report creation