Payment Screening Network for Anti-Money Laundering Validation
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Solution Overview
Problem
Current systems lack a robust and tamper-proof method for screening cross-border money transfer transactions to determine their legitimacy, especially in countries with poor banking infrastructure, making it difficult for receiving financial institutions to assess the validity of incoming transactions and prevent potential money laundering activities.
Innovation Solution
A method involving the reception of attributes from sending and receiving entities, a database search to generate a risk score, and the creation of validation codes to ensure the authenticity of transactions, with the risk score and validation codes communicated between financial institutions to determine the legitimacy of the transaction.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If sending financial institutions perform screening for cross-border transactions, then the ability to detect potential money laundering activities is improved, but the receiving financial institution has no way to determine if the incoming transaction is legitimate
Solution Approach 1:
The patent introduces a payment processing network as an intermediary between sending and receiving financial institutions. This network receives transaction information, performs screening against databases, generates risk scores and validation codes, and distributes this verified information to both institutions. The intermediary ensures that receiving institutions get reliable screening results without having to perform their own screening, thus resolving the information asymmetry problem.
2Reliability
If robust screening services are implemented to provide reliable information to both sending and receiving institutions, then the ability to judge transaction legitimacy is improved, but the system complexity increases
Solution Approach 1:
The patent divides the screening system into distinct functional modules: a payment processing network that handles central coordination, sending financial institutions that initiate transactions, receiving financial institutions that process incoming funds, and database systems that store screening information. Each component has a specific, simplified role, which reduces the complexity burden on individual institutions while maintaining system-wide reliability.
Solution Approach 2:
By centralizing the complex screening logic and database access in the payment processing network intermediary, the patent shields individual financial institutions from system complexity. The intermediary manages database queries, risk score calculations, and validation code generation, allowing participating institutions to use the system with minimal complexity overhead.
3Reliability
If validation codes are implemented to ensure authenticity of risk scores, then the security against tampering is improved, but the processing time and computational requirements increase
Solution Approach 1:
The payment processing network generates validation codes in advance as part of the initial transaction processing, before the receiving institution needs to verify the data. This preliminary generation of cryptographic validation codes ensures that when verification is needed, it can be performed quickly by simply checking the code against the received data, rather than performing complex real-time verification computations.
Data Source
AI summary
Methods and systems for anti money laundering screening are provided. The method includes determining a risk score and a first validation code associated with the risk score, based on information related to a funds transfer transaction and independently calculating a second validation code and comparing with the first validation code. The method further includes including the risk score and the validation score in a payment authorization message. The receiving financial entity accepts or denies the incoming funds transfer based on the risk score included in the payment authorization message.