Central to any transaction monitoring system are the threshold values at which each of the selected transaction monitoring scenarios operates. If set too low, threshold values will result in numerous false positives, requiring analysts to expend considerable time investigating useless alerts. If threshold values are set too high, analysts may fail to detect and report suspicious activity, as required by various regulatory agencies across the globe.
In an effort to optimize threshold values, most financial institutions take an approach to threshold setting and tuning that is focused solely on quantitatively determining, or tuning, the threshold values. This approach enables institutions to determine threshold values that are supported by a statistical or a data-driven analysis, but it fails to factor in the business intelligence that can be gleaned from alert investigations and available suspicious activity report (SAR) data.