Best Practices in STR Submission

Global

Regulated Entities are required to submit or file a Suspicious Transaction Report with the Financial Intelligence Unit (FIU) in their country through the prescribed online portal or offline means as applicable. This infographic charts out the Best Practices that Regulated Entities can rely upon whenever filing STR to ensure timely and accurate reporting of activities indicating potential Money Laundering (ML), Financing of Terrorism (FT), or Proliferation Financing (PF).

STR Filing and Submission Best Practices

Prepare an Internal STR

Many medium and large-sized Regulated Entities have designated employees to carry out specific tasks such as Screening Analysts for conducting Name Screening, KYC Analysts for conducting Customer Due Diligence (CDD), and so on. These employees are trained to conduct their specific responsibilities, which include identifying potentially suspicious transactions like known ML/FT or PF red flags and typologies and escalating them to the AML Compliance Officer through an internal workflow and reporting mechanism known as Internal STR. The AML Compliance Officer is required to analyse these Internal STRs to decide whether such an Internal STR contains reasonable grounds to file STR with the FIU.

The inclusion of the procedure of preparation of Internal STRs helps the first line of defence to escalate potentially suspicious transactions to the AML Compliance Officer through a streamlined workflow.

Be Relevant

The AML Compliance Officer responsible for filing STR with the FIU must ensure that the relevant information pertaining to the suspicious transaction in question is relevant. This can be achieved by having in place a standardised format containing fields for entering relevant information about the transaction, such as the following:

- Who: KYC details, including key identifier details of the customer whose transaction is found to be suspicious

- What: How the transaction is carried out

- When: Chronological order of events leading to suspicion

- Where: The location where the suspicious transaction took place

- How: The way events leading to or indicating suspicious transactions took place
- Why: Reason for suspicion.

Provide Detailed Information

Regulated Entities must be mindful that they have provided adequate details regarding the suspicious transaction in question. Information contained in STR must be specific and must give a clear picture of the red flags observed in that transaction, what typology ML/FT or PF the transaction indicates, etc. The reasons or reasonable grounds behind filing STR must be recorded in the STR.

Provide Supporting Documents

The AML Compliance Officer must ensure that documents supporting or corroborating the suspicion are attached. These documents include identification documents like a passport, national ID, etc. Further, if the STR submission is pertaining to a legal entity, then it could include a trade license, certificate of incorporation, address proof, etc. Other supplementary documents may include documents like invoices, receipts, sales orders, source of funds, source of wealth, etc.

Follow Timelines

Various FIUs across the world have indicated prescribed timelines for filing STRs pertaining to ML, FT, and PF on their respective websites. The AML/CFT and CPF Policies and Procedures of the Regulated Entity should include FIU-prescribed timeframes for filing STR. This enables the AML Compliance Officer, after investigating and deciding upon the accuracy and relevance of internal STR, to file or submit STR to the relevant FIU within the prescribed timeframe.

Staff Training

The Regulated Entity’s AML Compliance Officer and Senior Management must ensure that customer-facing personnel, such as the front office and sales team, are adequately trained to identify the known and emerging typologies of ML/FT and PF transactions along with training on red flags so that no suspicious transactions get missed. The staff should also be trained about the internal STR filing and escalation workflows so that the AML Compliance Officer can report to FIUs in the prescribed timeframe. Additionally, the staff needs to be trained about the use of transaction monitoring software if the Regulated Entity makes use of it so that the Transaction Monitoring Analyst can make the best use of technology for assisting the AML Compliance Officer to file STR with FIU in a timely manner.