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Authorities depend on financial institutions to report suspicious transactions. Often, this is the first indication of deeper criminal activity. What can be done to stop the flow of illegal money? Implementing a Suspicious Transaction Report (STR) protocol is essential for any financial institution.

Criminal networks rely on small transactions to stay under the radar. They know that larger transactions draw unwanted attention at financial institutions

Your Staff: the First Line of Defense

Your staff might be the only point of human interaction with someone trying to conduct criminal activity. Train them well, so they know what to look for. Uncooperative behavior or a refusal to provide documents could indicate that an individual wants to avoid detection for illicit purposes. In addition, bank tellers should be alerted to cash that is wet, has an odor, is covered with a substance, or other characteristics which seem out of the ordinary.

International Money Transfers

According to cybersecurity analyst Jeff Frazier, “In most countries, financial reporting entities are required to meet compliance obligations by reporting transactions suspected of being linked to money laundering, terrorist financing, criminal proceeds, drug trafficking or other serious criminal activities.”

There are some countries where these requirements are nonexistent, or poorly enforced. Money laundering goes through many outlets, through intricate criminal webs that stretch across the globe.

The appeal of using money remitters is that currency often does not physically cross borders. Rather, it is done by faxes, letters, couriers, and verified by phone. There is no official audit trail with these transactions, so they are more likely to go unnoticed. This is where alerts can detect fraudulent activity. If an individual uses frequent wire transfers to other countries or to several different locations, automatically generated alerts could flag those transactions as suspicious. Many times, these couriers or third parties involved in money laundering are on global watch lists for terrorist or other illegal activity.

The Role of Analytics

New banking technology gives consumers more freedom and flexibility, but it also presents new opportunities for criminal activity. Analytics can be utilized to avert this type of abuse. Suspicious activity is often based on a customer’s profile, and whether deposits or other transactions are consistent with past account activity. Prepaid cards and accounts, along with new fintech services, are giving criminals other outlets for fraud.

“Financial crime analytics allow organizations to build on traditional anti-money laundering /counter-terrorism financing detection, alerts and reporting by adding fraud rules, analytics and visualization capabilities, and the ability to detect cross-channel or internal fraud,” explains Frazier.

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