Suspicious Transaction Report (STR)

A Suspicious Transaction Report (STR) is a report filed by financial institutions and certain other entities to national financial intelligence units (FIUs) when they detect transactions that are unusual, inconsistent with a customer’s known legitimate business or personal activities, or that otherwise give rise to suspicion of money laundering or terrorist financing.

Key Points:

1. Purpose: The main purpose of an STR is to alert authorities to potentially illicit activities that could indicate money laundering, terrorist financing, or other financial crimes.
2. Detection Criteria: Transactions that might trigger an STR include unusually large transactions, transactions that have no apparent economic or lawful purpose, transactions involving high-risk countries, or patterns of transactions that are not consistent with a customer’s profile.
3. Confidentiality: The filing of an STR is confidential, and it is illegal to inform the parties involved in the transaction that an STR has been filed. This confidentiality is crucial to avoid tipping off suspects and compromising ongoing investigations.
4. Content: An STR contains detailed information about the suspicious transaction, including the parties involved, the nature and amount of the transaction, and the reasons for suspicion.
5. Regulatory Requirements: The requirement to file STRs is mandated by national and international regulations, such as the Financial Action Task Force (FATF) Recommendations, the European Union’s Anti-Money Laundering Directives (AMLD), and various national laws.
6. Filing Entities: Entities required to file STRs include banks, money services businesses, insurance companies, securities firms, casinos, and certain designated non-financial businesses and professions, depending on the specific regulations of each jurisdiction.
7. Timeliness: STRs must be filed promptly upon the detection of suspicious activity. The specific time frame for filing can vary by jurisdiction but is typically within a few days to a month after the transaction is deemed suspicious.
8. Follow-Up: After an STR is filed, the financial intelligence unit (FIU) may request additional information or documentation from the reporting institution. The FIU analyzes the STRs to identify patterns, trends, and connections to other suspicious activities.

STRs are a vital tool in the global effort to combat financial crime, providing a mechanism for financial institutions to communicate suspicions to authorities, thus facilitating the detection, investigation, and prosecution of money laundering and terrorist financing activities.