STR
STR Decision-Making Process…..
M A Islam, CAMS, CDCS, CSDG Compliance Route Mob : 01953587666 & 01732646139
STR Decision-Making Process
FILING AN STR
QUALITY ASSURANCE
STR FILING OVERSIGHT/ESCALATION
Closing the Account
Communicating with Law Enforcement on STRs
M A Islam, CAMS, CDCS, CSDG Compliance Route Mob : 01953587666 & 01732646139
STR Decision-Making Process
STR The decision of whether or not to file a STR often involves weighing the
aggravating and mitigating factors arising from the research conducted
during the investigative process.
Aggravating factors
Mitigating factors
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STR
STR Decision-Making Process
FI should draft procedures that document the factors to consider when
determining whether a STR is appropriate.
Properly trained personnel in charge of investigating and reporting suspicious
activities should have a clear and concise procedure for escalating their
findings to a compliance officer, manager, or other staff member with
authority to make the filing decision.
Escalating their
findings to a compliance officer,
manager, or other staff
Investigating Officer member with authority to make
the filing decision.
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STR
STR Decision-Making Process
The final decision should be documented and supported by the reasoning that
was used to make the determination.
Oftentimes, the reason not to file a STR maintains a similar level of importance
as the reason to file a STR.
After the decision to file has been made, the institution should report the activity
to their regulatory agency, law enforcement, or both as defined by the applicable
regulations within their jurisdiction.
Many jurisdictions require STRs to be filed within a specific number of days
following the discovery of potentially suspicious activity.
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STR
STR Decision-Making Process
In many jurisdictions, it is a requirement to report certain information regarding
STRs to senior management and/or the board of directors.
This information may be limited to
The number of reports filed
The dollar amounts involved,
Significant trends as observed by compliance
personnel
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STR
STR Decision-Making Process
In some cases, if the activity presents a significant or potentially ongoing
risk to the institution,
The leaders of the institution should be made aware so
that high level decisions can be made regarding potential
changes to systems, staffing, products, services, or
particular relationships maintained by the institution.
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STR
The decision to file a STR should be the result of
Aggravating factors : Accumulation
Mitigating factors : Lack
in combination with the knowledge of what is expected activity for
the institution’s
Client base
Product offerings
Geographical area of service
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STR
The STR filing should include:
1 The details of the suspicious activity
2 The related demographics
3 Why the institution finds the activity suspicious
The recipient of the STR does not have the intimate knowledge of
what is expected activity for a particular institutions clients and
products, and will only stand to benefit from the inclusion of this
information.
4 Any known typologies identified
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STR
▓ If, following the investigation, the institution decides that it should file a STR; it should
notify the investigators or prosecutors as soon as possible. However, this may not be
practical in certain jurisdictions.
But Why ?
The continuous nature of the STR process
The volume of reports being filed by the reporting institution
STR Filing timeline
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STR
The AML/CFT officer or designee should keep the management and board
Apprised of STR filing metrics
Any significant issues resulting from those filings
Especially items those pose a regulatory or reputational
risk to the institution.
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QUALITY ASSURANCE
All FI are required to file timely and complete STRs
The quality of the STRs can be an indication of the quality of a FI’s AML/CFT
program.
Quality and consistency in the STR decision-making process is critical to ensuring
the appropriate level of oversight in the investigative process.
A quality assurance (QA) review helps to ensure
1 STR filings are internally consistent
2 The right decisions are being made
3 High priority matters are identified and escalated to leadership
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I. that,
STR FILING OVERSIGHT/ESCALATION
An institution should have robust policies and procedures documenting the
appropriate oversight of the investigations process and regulatory reporting
requirements.
This should include specific actions to be taken
Such as escalation to senior management
in cases where a customer-facing employee or individual in the
AML/CFT chain of command is complicit or wilfully blind to
suspicious financial activities.
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Based on its internal investigation, the FI should make an independent determination as
to whether to close the account in issue.
Some of the factors that the institution should consider are:
1 The legal basis for closing an account
2 The institution’s stated policies and procedures for closing an account, which
may include automatic closure recommendation following a specified number of
STR filings
The seriousness of the underlying conduct. If the conduct rises to the level
3 where the account would ordinarily be closed, then the institution should
consider closing the account
4 The reputational risk to the institution posed by maintaining the account
Correspondence with law enforcement and requests from law enforcement to
5 either cancel or maintain the account
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Legal basis
Policies & procedures
Considering
Factors Underlying conduct
Reputational risk
Requests : law
enforcement
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When an institution files an STR, the details of that filing may rise to the level
that warrants additional law enforcement notification.
STRs represent financial intelligence to a country’s FIU; depending on the
volume of reports filed in a given country a report worthy of priority attention may
be hidden in the large number of reports filed.
Therefore, it is critical each institution develop its own policy and procedures for
communicating with law enforcement regarding STRs.
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Communicating with Law Enforcement on STRs
Following the filing of the STR, the responsible compliance officer or designee may
decide to contact a particular law enforcement division to notify them of the recent
filing to make them aware of activity relevant to their area of coverage or
geographical location.
Moreover, a law enforcement agent may contact the FI that filed the STR seeking
the underlying information used in the investigation that resulted in the STR.
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