Many startup founders ask me how to optimize the cost of transaction monitoring or blockchain tracking. Is it really necessary to send all transaction for monitoring and all blockchain transactions for risk-scoring?

No! You can be selective and apply a risk-based approach 🙂

It might indeed be very costly to monitor each incoming and each outgoing transaction, especially if the amounts are very small. In this case, you can create an automated logic, which transactions you will send for risk-scoring or monitoring (that is, assuming you are using a vendor and will send them such transactions for risk-scoring and monitoring via API) The logic for triggering monitoring could be, for example, a mix of the following rules: review the first 3-5 incoming and the first 3-5 outgoing transactions regardless the amount, and if all of them are low-risk, for all subsequent transactions you can only request a risk-score for transactions at XXX EUR, or score every second / every third transaction for transaction values between XX-XXX EUR.

To optimize the cost of sanctions and PEP scanning, you can be smarter in terms of how you treat inactive accounts (and we all know that in FinTech about 50% of your registered accounts can be inactive or may have had just one transaction a long time ago). You definitely need to re-scan all accounts periodically, including inactive ones, but you can scan inactive accounts less frequently, especially if they do not have any outstanding balance.

By the way: At Competitive Compliance, we know that Know Your Customer and Customer Due Diligence procedures are extremely important for FinTech startups to fulfill their regulatory obligations. Hence, we are offering you a FREE Customer Onboarding Template for your FinTech business.