What is a Suspicious Transaction Report (STR) and When Should a STR be Filed?
Definition: Suspicious Transaction Report (STR)
According to FATF Recommendation 20: Reporting of suspicious transactions, any transaction that has the necessary evidence to indicate that it is related to criminal activity needs to be reported to the local Financial Intelligence Unit. That report is called the Suspicious Transaction Report (STR), essential to alert financial authorities aware of possible money laundering, occurrences of terrorism financing, or any financial crimes. This is done to prevent potential financial crimes and
Suspicious Transaction Reports are incredibly important given that they tip off financial authorities to transactions that might be a precursor to crime. Financial authorities need to urgently assess the report with a risk-based approach and if necessary, reach out to local or international law enforcement or financial intelligence agencies. A report should be made to the relevant authorities after the discovery of suspicious activities or fraud, which risk the safety, soundness, or reputation of any relevant financial entities. The suspect’s transaction risk profile will be determined through customer due diligence (CDD), screening, transaction, and behavioural monitoring. It is also recommended for the company to implement enhanced standards to tackle money laundering.
In some countries, it is a legal obligation to file a Suspicious Transaction Report upon discovery.
Who does the reporting?
In the first initial stages of detection, an entity’s AML compliance solution will filter according to the system’s risk matrix. However, it falls to the compliance team to verify and report the suspicious transaction. The compliance team needs to be well trained in detecting suspicious activity and be able to provide the relevant information needed for an STR form.
According to MAS Notice CMG-N01, any relevant entities has 5 working days after the discovery of any suspicious activities and incidents of fraud, where such activities or incidents are material to their safety, soundness or reputation. Compliance officers will have to submit Form F1 “Suspicious Activities & Incidents of Fraud Report” and any relevant details of the case to Monetary Authority of Singapore (MAS).
Reporting entities are also required to submit a Suspicious Transaction Report (STR) to the Suspicious Transaction Reporting Office (STRO). The STRO receives, analyses and disseminates financial reports: Suspicious Transaction Reports (STRs), Cash Movement Reports (CMRs) and Cash Transaction Reports (CTRs). Compliance teams can access the STR form and e-file on SONAR. In the event that police investigations are needed, the business has to file a Police Report as well. Depending on the filer, different accounts such as CorpPass, Singpass or Sonar will be needed.
Given the confidential nature of the information disclosed to the Suspicious Transaction Reporting Office (STRO), It is extremely important that the reporting process is secure. Information and identity of informers will not be revealed, nor will any information submitted be used as evidence in any civil or criminal proceedings.
Money Launderers often find a variety of schemes to hide their illicit activities, regulatory technology can help detect suspicious activities. Companies can keep an eye out for red flags that may signal suspicious activity, read our article on red flags here.
With compliance solutions like Regtank, the information needed to fulfill regulatory requirements can be presented in an accessible and customisable format.
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