Do's and Don'ts

The Do’s and Don’ts of filing STRs

In Anti-Money Laundering by Parvesh ShamdasaniLeave a Comment

Filing Suspicious Transactions Reports (STRs) are a crucial part of any AML program. It helps the authorities catch possible criminals and provides vital intelligence for law enforcement. It is also an important element of AML auditing – assessing the quality of STRs can say a lot about the processes in place and the quality of the people in the process. The problem among SMEs are the use of STRs as a protective measure, i.e. filing cases with no real suspicion and just to cover themselves. With auditors and banks enquiring about STRs, this has also lead to some businesses creating periodic targets regarding STR filing. This not only increases internal but external workload as well, according to SCMP, as STRs in Hong Kong have more than quadrupled in 6 years. As a result I have compiled a list of “Do’s and Don’ts” of filing STRs. By follow the list below, not only will you have less internal work and quality STRs to satisfy external parties, you will be helping intelligence agencies like JFIU cope with their workload.

  • Do – File an internal unusual transactions report; This shows the internal decision making leading up to STR filing decision
  • Don’t – File an STR without an internal report; Decisions on whether or not to file an STR can be as important as the STR themselves and should be documented

  • Do – Be as detailed as possible; The more details you have, the better intelligence agencies can assess your case
  • Don’t – Write an essay; Be direct and to the point with full descriptions and reason for suspicion

  • Do – Report sincere cases that you believe are actual suspicious transactions; The sincerity shows in the STR and will lead to good quality reports
  • Don’t – Report “protective” cases that are not suspicious; This give intelligence agencies unnecessary work and external parties might realise the subpar STR quality

  • Do – Report cases as and when they happen; Reports should be on an ongoing basis
  • Don’t – Report cases to hit set targets; This just creates unnecessary workload internally and externally, and gives external parties a bad impression if realised

  • Do – Keep the original documents filed; This is what I strongly advise as it is an important document
  • Don’t – Destroy the documents after transmitting or when feedback has been received from your reporting authority; By law all important documents must be kept for a certain period

  • Do – If the case is related to a previous report, mention it and use the case reference number; This makes life easier for the intelligence authority when following up
  • Don’t – File a new report with no mention of previous related case(s); It will be harder for the receiving authority to piece things together and can lead to misunderstandings

  • Do – Keep an eye on reported parties for any suspicious behaviour after STR filing and raise risk rating if required; This is a key element that many SMEs forget
  • Don’t – Become ignorant of the parties involved once STR has been filed; Unfortunately filing an STR includes post monitoring as well, which can increase workload

  • Do – Apply EDD on the customer/transaction once STR has been filed, irrespective of response from reporting authority; Thorough investigation is essential
  • Don’t – Treat the customer/transaction as normal once STR has been filed, irrespective of response from reporting authority; Many SMEs are culpable of this

  • Do – Make sure when investing not to “Tip off” the customer; If investing may tip them off, best to avoid it altogether
  • Don’t – Inform the customer that you are filing an STR involving them; This is against the law

  • Do – Take action straight away; Time is of the essence and a fresher memory will lead to a more accurate STR filing
  • Don’t – Wait too long; Details might be forgotten and inaction might invite legal consequences if the case is genuine

I hope you found this useful. Please get in touch if you have any questions or if you feel I should add anything else to the list.

Business and compliance enthusiast, problem solver, road warrior, police ID check magnet, and half geek whose exploits have taken him around the United States, United Kingdom, Caribbean, India, deep into Southeast Asia and West Africa. Entered the anti-money laundering and high risk field to help develop understanding, contribute research, improve standards, prevent profiteering at the expensive of SMEs, and to protect interests of the average person.
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