By PAUL O’DONOGHUE, Senior Correspondent
A ‘two-tier’ system for STRs (suspicious transaction reports) could more effectively tackle financial crime, the President of the FATF (Financial Action Task Force) has suggested.
Giles Thomson, who took over as FATF President in July, said this could allow officials to prioritise serious alerts.
“When the FATF standards were created many years ago, we were living in a bit of a different world, where FIUs (Financial Intelligence Units) weren’t drowning so much in STRs,” he said during Q&A session at ‘International Anti-Financial Crime Summit 2026’ (IAFCS 2026) in London.
“What does the future look like for financial intelligence? Do we need to move to a two-tier STR system where you have sort of lower-level reporting that is being done, versus higher value reporting that’s often stemming from public-private partnerships and information sharing initiatives?”
The comments come amid mounting criticisms of STR systems globally. Critics argue that, too often, financial institutions send high volumes of ‘defensive’ alerts to regulators to ensure that they are not penalised for failing to report suspicious activity.
This can result in many FIUs receiving thousands of low-value alerts. François Villeroy de Galhau, then-Governor of the Bank of France, said last year that French officials received nearly 197,000 STRs from the financial sector in 2024, warning that superficial reports can “saturate the system”.
Multiple other watchdogs, particularly in the US, have recently voiced similar concerns.
STR alert tier system
Thomson said that, previously, officials were focused on ensuring that financial institutions would file STRs at all.
“The system was very much based on an STR being investigated over time, reported, worked on [by] an FIU,” he said.
“But the world’s moved on a lot over the last few years. People are pooling together transactions so they can be monitored in real time. In the UK, we’re doing some exciting work on something we call data fusion, to bring together private sector data sets to be able to look at and analyze those.”
He added: “We’re getting data, financial intelligence from all sorts of different systems, and finding value in things outside the STR system as well. I think one of the most invigorating conversations I always have at events like this is, what does the future look like for financial intelligence?”
Three tiers
Pat Lordan, the former head of Ireland’s financial intelligence unit, said he agreed with the suggestion to move to an STR ‘tier’ system. However, he suggested it would be three-tier, rather than two.
“I think it is a good idea for the FATF to look at. My only worry with a two-tier system is that you get the tier 1 stuff all being worked on, and then tier 2 would get left behind 95% of the time,” he told AML Intelligence.
“I’d probably go further and suggest a three-level system. Level 1 is a red alert, where criminals could get someone’s money if we don’t act fast.
“Then level two, ‘amber’, should be serious cases high-risk money laundering, which must be dealt with, but not necessarily today.
“Level three would be something like a criminal running a nail bar to launder money, which we can always deal with down the road.”
Thomson also revealed at IAFCS 2026 that the FATF is planning to hold a ‘flagship’ fraud summit in spring 2027. His full speech at the London event is available [HERE].
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