Which recommendation should the audit team provide to address transaction monitoring (TM) issues?

Which recommendation should the audit team provide to address transaction monitoring (TM) issues?
A . Switch off those detection scenarios that are producing too many false positives.
B . Apply the same thresholds across all client types to ensure alignment of risk coverage.
C . Perform a coverage assessment of the current suite of TM detection scenarios against the bank’s money laundering and terrorist financing risks
D . Provide training for first-line staff on how to review and disposition TM alerts.

Answer: C

Explanation:

Importance of Coverage Assessment:

Coverage assessment ensures that the TM scenarios address the full spectrum of identified money laundering (ML) and terrorist financing (TF) risks relevant to the organization.

This aligns with FATF Recommendations on risk-based approaches and the effectiveness of transaction monitoring systems.

Key Reference Justification:

Basel Committee guidelines stress that financial institutions must regularly review their transaction monitoring coverage to ensure alignment with the risk landscape.