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How suspicious transaction reporting systems are improving around the world

Filing STRs has long presented a challenge for financial institutions, and in response the global STR landscape is gradually but positively changing.

Jacob Gloser
December 14, 2021

Filing STRs has long been a challenging process. They’re time-consuming and repetitive if created manually, and need to be accurate and submitted within the stipulated timeframe. Strict anti-tipping off regulations bring additional pressure to the submission process, as does media scrutiny of how FIs deal - or don’t deal - with the subjects of STRs.

In response to these challenges, and others, the global STR landscape is gradually but positively changing in three important ways:  

1. Technology is making it easier to file STRs with FIUs

New technologies are beginning to transform this otherwise time-consuming regulatory requirement. This is because enforcement agencies around the world are introducing, allowing, and encouraging new tech, including Application Programming Interfaces (APIs), to make reporting easier.

In the US, the new Anti-Money Laundering Act has introduced several measures to make SAR filing easier, including the provision for FinCEN to “establish streamlined, including automated processes” for non-complex categories of SARs.

In response to industry demand for a better-designed SMR process, AUSTRAC has made commitments to overhaul its clunky, 20-year-old reporting system over the next four years. Almost half (44%) of reporting entities said the design was a “priority issue,” so a key aim of the system update is to make the process more user-friendly, making it easier for entities to comply with their reporting obligations.

In the UK, progress is driven by Action 30 of the Government’s Economic Crime Plan, which sets out to deliver SARs IT transformation. It is planned that the new digital service for SARs reporting and analysis will be completed by March 2022. Efforts are also being focused on improving the quality of SARs submitted. Sector-specific templates, for example, are an initiative to help guide users as they submit reports and flag any errors or omissions as they occur. This is important because a significant number of SARs are of low quality and contain limited or even no useful intelligence.

2. New technology is making it easier for FIUs to process reports

In Hong Kong, police are boosting computing power to help their new AML team cope with increasing volumes of STRs, which rose by almost 11% last year. With officers currently having to analyse STRs manually, the computer system upgrade will use big data technologies to help with STR processing, saving them time.  

In the UK, the National Crime Agency’s (NCA) new IT is working to better manage the volume of SARs submitted. The new tools promise to draw out the values of SARs, spotting indications of vulnerability, patterns and networks. Moreover, the new system should provide law enforcement with a better portal, including easier access and search functionality.  

There is huge potential for digital automation in STR processing. This would enable automated software systems to do all the low value, repetitive work of checking STRs, so that human regulators can focus on high priority investigations.

3. New technology can facilitate responsible risk management  

New technology and APIs are starting to enable more data to flow between various business sections in financial institutions, where permissible.  

With more data to hand, compliance teams have a greater understanding of a customer’s risk level, enabling better decisions about pursuing investigations.  

This approach demonstrates appropriate action to all stakeholders, rather than being perceived as continuing business as usual. Industry needs - and is beginning to see - a movement towards the continuous risk assessment of customers.

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 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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