Conflict monitoring processes are central to cope with fluctuating environmental demands. However, the efficacy of these processes depends on previous trial history/experience, which is reflected in the “congruency sequence effect” (CSE). Several theoretical accounts have been put forward to explain this effect. Some accounts stress the role of perceptual processes in the emergence of the CSE. As yet, it is elusive how these perceptual processes are implemented on a neural level. We examined this question using a newly developed moving dots flanker task. We combine decomposition methods of EEG data and source localization. We show that perceptual processes modulate the CSE and can be isolated in neurophysiological signals, especially in the N2 ERP time window. However, mechanisms relating perception to action are also coded and modulated in this time window. We show that middle frontal regions (BA 6) are associated with processes dealing with purely perceptual processes. Inferior frontal regions (BA 45) are associated with processes dealing with stimulus–response transition processes. Likely, the neurophysiological modulations reflect unbinding processes at the perceptual level, and stimulus–response translation level needed to respond correctly on the presented (changed) stimulus–response relationships. The data establish a direct relationship between psychological concepts focusing on perceptual processes during conflict monitoring and neurophysiological processes using signal decomposition.