What does effective monitoring of transactions help financial institutions to do?

Effective monitoring of transactions enables financial institutions to identify suspicious activities early. This proactive approach is crucial in the fight against money laundering and other financial crimes. By continuously analyzing transaction patterns and behaviors, institutions can detect irregularities that may suggest illegal activity. Early identification of these suspicious activities allows for prompt investigation and action, which can prevent potential losses and ensure compliance with regulatory requirements.

Monitoring transactions is fundamental to risk assessment and management, as it helps institutions stay vigilant and compliant with anti-money laundering (AML) regulations. Early detection not only protects the institution from financial and reputational damage but also contributes to broader efforts to maintain the integrity of the financial system.

The other options, while they may be relevant in different contexts, do not directly relate to the primary purpose of transaction monitoring in the context of preventing financial crimes. For instance, while monitoring can indirectly help in managing operational costs or adjusting transaction speeds, the main goal remains the identification of suspicious activities.