Absolutely an algorithmic issue and your comment about edge cases is spot on. But when the algorithm flags an edge case, whatever happened to manual review by a human? In this case, any human looking at this transaction would have found nothing unusual.

I'm pretty sure there is a Black Mirror episode where someone ends up becoming an "edge case" and it all goes downhill from there. I haven't actually watched it but have read about it referenced in many similar contexts so maybe someone knows the actual episode.