AML-KYC Tutorial | Suspicious Transaction Report (STR)

 

Suspicious Transaction Report (STR)

Let’s learn about why it is important to earn knowledge about the Suspicious Transaction Report. Every banking company, financial institution, and intermediary shall furnish to FIU information of all suspicious transactions whether or not made in cash.

Suspicions transaction means a transaction including an attempted transaction, whether or not made in cash which, to a person acting in good faith –
(a) gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the Schedule to the Act, regardless of the value involved; or
(b) appears to be made in circumstances of unusual or unjustified complexity; or
(c)  appears to have no economic rationale or bonafide purpose; or
(d)  gives  rise  to  a  reasonable  ground  of  suspicion  that  it may involve financing of the activities relating to terrorism;

Broad categories of reason for suspicion and examples of suspicious transactions for a banking company are indicated as under:

Identity of client
–        False identification documents
–        Identification documents which could not be verified within reasonable time
–        Accounts opened with names very close to other established business entities
Background of client
–        Suspicious background  or links with known criminals
Multiple accounts
–        Large number of accounts having a common account holder, introducer or authorized signatory with no rationale
–        Unexplained transfers between multiple accounts with no rationale
Activity in accounts
–        Unusual activity compared with past transactions
–        Sudden activity in dormant accounts
–        Activity inconsistent with what would be expected from declared business
Nature of transactions
–        Unusual or unjustified complexity
–        No economic rationale or bonafide purpose
–        Frequent purchases of drafts or other negotiable instruments with cash
–        Nature of transactions inconsistent with what would be expected from declared business

 

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