The filing of suspicious transaction reports (STRs) as part of a robust anti-money laundering (AML) framework is mandated of all financial institutions by the Financial Action Task Force (FATF).
Filing STRs is one of the most critical things a compliance officer can do to alert law enforcement to potential criminal activity, and to play their part in the fight against financial crime, but they can also be a cumbersome, labour-intensive process when manually created and filed.
Compliance professionals tasked with filing STRs face the following challenges:
1. Creating STRs can be a manual and time-consuming task
To stand the best chance of preventing and tackling crime, STRs need to be accurate and submitted within the stipulated timeframe.
For most companies this poses challenges because creating an STR is a manual, cumbersome process that requires a lot of repetitive work, including information gathering and form filling.
There is usually a vast amount of information that must be analysed to determine its relevance to the suspicious activity, and this can become a barrier to submission.
Since STRs are sensitive documents, there can only be a limited number of people involved in compiling one, creating a significant workload for those designated people as the work cannot be delegated or outsourced.
2. Information security must be robust
Confidentiality is paramount for ensuring the reporting process works as it is designed to conceal the secrecy of possible or ongoing investigations is not compromised.
FATF mandates that “financial institutions, their directors, officers and employees should be prohibited by law from disclosing (“tipping-off”) the fact that a suspicious transaction report (STR) or related information is being filed with the FIU.”
3. Maintaining an audit trail for the STR
Once STRs are submitted, the regulator can request additional information on the case for up to five years. When STRs are created manually, this can present challenges as the person who filed the STR may have moved on from the reporting entity (financial institution/company) or systems may have changed, making it difficult to retrospectively locate the data needed.
How can STRs be improved?
The global STR landscape is gradually evolving to address these issues and others. Technology especially has an important role to play, and as the AML industry begins to more effectively adopt new technologies and embrace digitalisation, STRs are becoming easier to file and process.
For more on how STR systems are improving, see a previous blog.
Introducing Napier’s STR builder
Napier’s Suspicious Transaction Report Builder facilitates faster, safer filing of STRs with data collation, automatic form completion, robust data security, and auto report submission.
Fully compliant with global regulatory requirements, it will transform any financial crime or AML compliance function by completing up to 80% of the form with the required information for STRs, ensuring the form and the data are fully encrypted, and automating the submission process where local regulation allows.
For more information about STRs, their role in combatting financial crime, and how reporting systems are evolving with the introduction of new technologies, download our eBook: Suspicious transaction reporting: how technology can ease the burden.
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Photo by @pawel_czerwinksi on Unsplash.
