What is an STR/SAR?
A Suspicious Transaction Report (STR) / Suspicious Activity Report (SAR) is made when a person or institution suspects that any property is directly or indirectly connected to a criminal conduct, and the knowledge or suspicion arose during the course of the business or exchange.
While suspicious and/or unusual activity alone does not constitute a crime, AML compliance requires such activity to be reported to local regulators or the FinCEN in the form of a STR / SAR.
AML-CFT for Virtual Asset Service Providers (VASPs)
It is only a matter of time for VASPs or Crypto firms/exchanges to encounter suspicious or unusual activity over the course of their business. Adopting a risk-based approach, reporting entities should closely assess such transactions as part of the customer due diligence, real-time payment screening and transaction monitoring process to identify any changes in the user risk profile.
Most of the time, suspicious activities or transactions will be picked up by an institution’s AML system, like the Regtank Solution. However, we cannot forget the importance of human vigilance during the STR process. Employees must also be trained to recognise suspicious activity, have the knowledge on how to complete a STR, as well as the submission of STR to the relevant authorities.
How to Improve and Expedite the STR Process?
1. Elaborate about your Business Model in the STR Narrative
With the emergence of new technologies and the evolution of financial crime in the crypto industry, law enforcement is continuously discovering new methods deployed by criminals to go ‘under the radar’. Members of law enforcement who receive such reports may not be as familiar or possess technical knowledge about cryptocurrency or virtual assets. Providing a narrative of the business model will help provide context to law enforcement officers, as well as to expedite the investigation process.
2. Avoid Naming the Victims in the Subject Field of the STR
One of the most common errors made by VASPs during the reporting process is the inclusion of the victim’s name in the subject field. Regulators/investigators only need the names of the perpetrators as the key subject in the report. The name of the victim should be left out to avoid any confusion.
3. Allocate Resources Based on Risk Assessment
Every reporting entity should allocate resources based on their risk assessment to focus on areas that present vulnerabilities for ML/FT activities. An efficient resource allocation will help VASPs preemptively identify suspicious activity as well as facilitate the reporting process to authorities/regulators.
How We Can Help
The Regtank compliance solution can automatically pick-out suspicious transactions and generate comprehensive screening reports to increase the efficiency of your STR process. Find out how our AML compliance solution can be tailored to your needs today.
Contact us at firstname.lastname@example.org for a demo!