Alert handling procedures refer to the structured processes financial institutions and regulated entities follow to review, investigate and resolve alerts generated by their transaction monitoring, screening and compliance systems.

These alerts are typically triggered when a customer's activity, transaction or profile deviates from expected behavior, matches a sanctions list or raises potential red flags related to money laundering, fraud or terrorist financing.

The alert handling process begins with an initial review to determine the legitimacy and severity of the alert. Compliance teams assess whether the flagged activity is truly suspicious or if it can be explained through additional customer due diligence (CDD) or supporting documentation. If the alert is deemed low risk or a false positive, it is dismissed or resolved. If the alert indicates potential financial crime, further investigation is conducted, and enhanced due diligence (EDD) may be applied. In cases where suspicious activity is confirmed, the institution may be required to file a Suspicious Activity Report (SAR) with the relevant financial regulator or Financial Intelligence Unit (FIU).

Efficient alert handling procedures are essential for ensuring regulatory compliance, preventing financial crime and reducing operational inefficiencies.

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