Section 4

What is a suspicious transaction?

A completed or attempted financial transaction where there are reasonable grounds to suspect ML or TF

What does STR stand for?

Suspicious Transaction Report

What does RGS stand for?

Reasonable Grounds to Suspect

What is the reporting threshold for an STR?

Reasonable Grounds to Suspect

Does an STR have a monetary threshold?

No

Does RGS require proof of criminal activity?

No

What is RGS based on?

Facts; context; and ML or TF indicators

What is simple suspicion?

A hunch or gut feeling without enough facts context or indicators to support RGS

What is reasonable grounds to believe?

A higher threshold based on probability and verified facts

Which threshold is required to submit an STR?

Reasonable Grounds to Suspect

What is a fact in an STR assessment?

An event action occurrence or element known to have happened or existed

What is context in an STR assessment?

Information that explains the circumstances surrounding a transaction

Why is context important in STR assessment?

It helps distinguish suspicious activity from reasonable activity

Can one indicator contribute to RGS?

Yes; but it must be assessed with facts and context

Should suspicious indicators be assessed alone or in context?

In context

What is a completed transaction?

A financial transaction that has occurred

What is an attempted transaction?

A transaction the client intended to conduct and took concrete steps to complete

Is a simple request for information an attempted transaction?

No

Can attempted transactions be reportable?

Yes

When must an STR be submitted to FINTRAC?

As soon as practicable after RGS is reached

What does as soon as practicable mean?

The STR must be treated as a priority once RGS has been reached

Why are STRs important to FINTRAC?

They provide financial intelligence and help identify relationships networks and criminal activity

What should a well completed STR explain?

Who; what; when; where; why; and how

What should an STR narrative include?

Facts; context; indicators; and reasons for suspicion

What should be avoided in an STR narrative?

Internal jargon; unexplained acronyms; vague conclusions

What is tipping off?

Informing a client that an STR has been or will be submitted

Is tipping off permitted?

No

When must identity be verified before filing an STR?

When reasonable measures can be taken without tipping off

When is identity verification before an STR not required?

When the client was already identified; or asking would tip them off

What protection exists for good faith STR reporting?

Immunity from civil and criminal proceedings

Once RGS is reached should reporting stop after one STR?

No

What should happen if suspicion continues?

Continue reporting and periodically reassess the client

What should follow up STRs reference?

Previous STR number; date of submission; prior grounds; and new information

What is the SAFE approach?

Screen; Ask; Find; Evaluate

What happens during the Screen step?

Identify suspicious indicators or unusual activity

What happens during the Ask step?

Ask appropriate questions to obtain a reasonable explanation

What must be avoided during the Ask step?

Tipping off the client

What happens during the Find step?

Review KYC records and information already known about the client

What happens during the Evaluate step?

Decide whether the facts context and indicators create RGS

What KYC factors should be considered when assessing suspicion?

Client business; financial history; general background; behaviour

What is the key principle when assessing suspicion?

Behaviour is suspicious; not people

Should suspicion be based on race age or ethnicity?

No

Why is knowing normal client activity important?

It helps identify activity that is unusual for that client

Why is knowing normal industry activity important?

It helps determine whether a transaction is reasonable or suspicious

What should staff do if a client cannot provide a reasonable explanation?

Escalate the activity for STR assessment

What is an Unusual Transaction Report?

An internal report or trigger used to escalate unusual activity for compliance review

What can trigger suspicion besides transaction activity?

Adverse media; law enforcement referral; client behaviour; products; jurisdictions; transaction type

What are transactional indicators?

Indicators based on one or more transactions

What are contextual indicators?

Indicators based on surrounding information such as behaviour events or relationships

What are the nine main categories of suspicious indicators?

Behaviour; Knowledge; Identity documents; Accounts; Cash; Economic purpose; International; Offshore business; Terrorist financing

What behavioural indicator may occur when identification is requested?

The client abandons the transaction

What behavioural indicator involves reluctance to provide information?

The client is secretive or defensive

What behavioural indicator may indicate third party influence?

The client looks to another person for direction

What behavioural indicator involves correspondence?

The client does not want correspondence sent to their home address

What behavioural indicator involves money transfer systems?

The client uses informal money transfer systems instead of formal financial institutions

What behavioural indicator suggests willful ignorance?

The client appears willfully blind to possible money laundering

What knowledge indicator suggests avoidance of reporting?

The client asks questions about reporting thresholds

What knowledge indicator suggests structuring?

The client appears to structure transactions below reporting thresholds

What knowledge indicator suggests unusual AML awareness?

The client has above average knowledge of reporting requirements

What knowledge indicator involves avoiding documentation?

The client attempts to convince staff not to complete required forms

What identity document indicator involves false information?

The client provides doubtful or vague identity information

What identity document indicator involves alternative identification?

The client wants to establish identity using methods other than identification documents

What identity document indicator involves copies only?

The client submits only copies of identification documents

What identity document indicator involves delays?

The client inordinately delays presenting personal or corporate documents

What identity document indicator involves multiple identities?

The client uses aliases or different identification documents

What identity document indicator often results in an abandoned transaction?

The client leaves or changes the transaction when asked for identification

What account indicator may suggest layering?

Funds are deposited into several accounts then consolidated before being transferred

What account indicator involves multiple institutions?

The client maintains accounts at several financial institutions in one area

What account indicator involves multiple small deposits?

Repeated deposits below reporting thresholds

What account indicator involves unrelated third parties?

Deposits or payments are made by unrelated individuals

What account indicator involves transaction volume?

Activity is inconsistent with the client's known profile

What account indicator involves u turn transactions?

Funds leave Canada then portions return later

What account indicator involves frequent wire transfers?

Large unexplained incoming and outgoing wire transfers

What account indicator involves business activity?

The account shows activity inconsistent with the stated business

What account indicator involves rapid movement of funds?

Funds are deposited then quickly withdrawn or transferred

What account indicator involves many related deposits?

Numerous individuals deposit into the same account without explanation

What cash indicator is commonly associated with structuring?

Repeated cash transactions below reporting thresholds

What cash indicator involves traveller's cheques?

Frequent purchases of traveller's cheques foreign drafts or negotiable instruments

What cash indicator involves intermediaries?

Another person is used to make cash deposits or payments

What cash indicator involves high value assets?

Purchasing expensive assets with cash

What cash indicator involves money orders?

Regular purchases of multiple money orders

What cash indicator involves casino activity?

Purchasing and cashing casino chips without meaningful gaming

What cash indicator involves cash condition?

Cash is musty extremely dirty or unusually packaged

What cash indicator involves denominations?

Large amounts of small denominations with the total unknown to the client

What cash indicator involves exchanging currency?

Frequently exchanging small bills for larger denominations

What economic purpose indicator suggests suspicious activity?

The transaction has no logical business or economic purpose

What economic purpose indicator involves unnecessary complexity?

The transaction is more complex than required for its purpose

What economic purpose indicator involves losses?

Funds move with no apparent benefit despite financial loss

What economic purpose indicator involves client profile?

The transaction is inconsistent with the client's known financial circumstances

What economic purpose indicator involves business practice?

The transaction is inconsistent with normal commercial practice

What economic purpose indicator involves employment?

The client's transactions exceed what their employment or finances would suggest

What are the four main Know Your Client factors used when assessing suspicious transactions?

General background; Financial activity; Behaviour; Transaction activity

Why should suspicious transactions be assessed using Know Your Client information?

To determine whether activity is consistent with what is known about the client

What is Trade Based Money Laundering?

Money laundering conducted through trade transactions to disguise the movement of value

What TBML indicator involves pricing?

Over invoicing or under invoicing goods or services

What TBML indicator involves documentation?

Discrepancies between invoices shipping records or customs documents

What TBML indicator involves business activity?

Goods or trade inconsistent with the client's normal business

What international indicator may suggest money laundering?

Transactions involving high risk jurisdictions without a clear business purpose

What international indicator involves secrecy jurisdictions?

Transactions involving jurisdictions known for banking secrecy or weak AML controls

What offshore business indicator involves ownership concealment?

Use of offshore companies or offshore banks to obscure ownership