Regulators may require a financial institution to perform a transaction review of historical activity, often referred to as a “lookback,” when they determine that the financial institution does not have an adequate transaction monitoring program and/or has not evidenced sound decision making in determining whether transactions are suspicious or not. The scope of the lookback may span from six months to multiple years. Often, the regulators will mandate that the financial institution engage an independent third party to perform the lookback.
Lookbacks are time-consuming, costly and often perceived by the industry as punitive exercises that provide little real value to an institution. If your institution is facing a lookback, the lessons in this perspective should be considered to maximize efficiency and value.