SUSPICIOUS TRANSACTION REPORTS AMLCFT Compliance Programme for Financial

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SUSPICIOUS TRANSACTION REPORTS AML/CFT Compliance Programme for Financial Institutions Financial Intelligence Unit 1

SUSPICIOUS TRANSACTION REPORTS AML/CFT Compliance Programme for Financial Institutions Financial Intelligence Unit 1

IDENTIFICATION & REPORTING OF STRS 2

IDENTIFICATION & REPORTING OF STRS 2

WHAT IS AN STR • Suspicious Transaction Report (STR) is a report made by

WHAT IS AN STR • Suspicious Transaction Report (STR) is a report made by an Institution to the FIU, regarding suspicious or potentially suspicious activity • FATF Recommendation 20 requires RI to file STRs with FIU and FIU to establish procedures to ensure STRs are reported 4

LEGAL REQUIREMENT Sec 7 of FTRA If the reporting institutions have reasonable grounds to

LEGAL REQUIREMENT Sec 7 of FTRA If the reporting institutions have reasonable grounds to suspect that any transaction or attempted transaction may be related to the commission of any unlawful activity or any criminal offence to be reported by way of mail (e-mail) or telephone call that to be followed up in writing within 24 hours 5

Reporting STRs Under Sec. 7 of FTRA Financial Institutions – LCB & LSBs –

Reporting STRs Under Sec. 7 of FTRA Financial Institutions – LCB & LSBs – LFC – Insurance Companies – Stock Brokering Firms – Money Changers – MVTS providers DNFBPs - Casinos, Lawyers, Accountants, Real Estate Dealers, Dealer in Precious Metals etc. 6

Reporting STRs Under Sec. 5 of the PMLA • Any person who knows or

Reporting STRs Under Sec. 5 of the PMLA • Any person who knows or has reason to believe from information or other matter obtained by him in the course of any trade, profession, business or employment carried on by such person, that any property has been derived or realized from any unlawful activity, the person should disclose his knowledge or belief as soon as is practicable to the FIU-Sri Lanka – LEAs – Regulators – General Public 7

Suspicious Transaction Reports (STRs) • To be submitted within two (2) working days after

Suspicious Transaction Reports (STRs) • To be submitted within two (2) working days after FORMING the suspicion • Reports to be comprehensive • with sufficient details • All reports must be submitted via Lanka. Fin • And a signed copy to be sent to FIU

REASONABLE GROUNDS TO SUSPECT Account Indicators • known background of the customer does not

REASONABLE GROUNDS TO SUSPECT Account Indicators • known background of the customer does not match the transactions pattern • customer refuse to provide reasonable explanation or use misleading identification or make it difficult to verify information • client is insistent on cash transactions when other products may be more appropriate • cash deposits or withdrawals fall consistently just below reportable transaction thresholds 9

REASONABLE GROUNDS TO SUSPECT Account Indicators • multiple clients using the same address for

REASONABLE GROUNDS TO SUSPECT Account Indicators • multiple clients using the same address for correspondence • stated occupation of an individual does not correspond with the type of transactions conducted • unusual discrepancies in identification, such as name, address or date of birth 10

REASONABLE GROUNDS TO SUSPECT Client Behavior • Customer has unusually high knowledge of bank

REASONABLE GROUNDS TO SUSPECT Client Behavior • Customer has unusually high knowledge of bank reporting obligations or shows unusual interest in internal controls and procedures • Customer provides inconsistent information regarding their affairs • Customer is hurried, nervous or evasive • information provided by the customer contradicts information gathered from other sources • Customer visits branch with another person who directs them regarding the transaction 11

Case Study • Government Employee taking a millions worth life insurance for him and

Case Study • Government Employee taking a millions worth life insurance for him and wife 12

Case Study 5 • Forged NICs • Accounts opened for the names of deceased

Case Study 5 • Forged NICs • Accounts opened for the names of deceased persons 13

Case Study 7 14

Case Study 7 14

NOT ONLY COMPLETED TRANSACTIONS Any transaction or attempted transaction may be related to the

NOT ONLY COMPLETED TRANSACTIONS Any transaction or attempted transaction may be related to the commission of any unlawful activity or any criminal offence to be reported Reporting a CTR does not replace the requirement to report STR 15

HOW SOON DO WE HAVE TO REPORT ? As soon as practicable, after forming

HOW SOON DO WE HAVE TO REPORT ? As soon as practicable, after forming the suspicion or receiving the information but not latter than two working days 16

Timing of Reporting • The FTRA requires suspicious reports to be submitted to the

Timing of Reporting • The FTRA requires suspicious reports to be submitted to the FIU as soon as practicably possible but no later than two working days of formation of suspicion. • This means that, regardless of your process steps after the initial formation of suspicion, the suspicion itself must be reported even if your process has not completed. Your process for dealing with suspicion may proceed concurrently with the reporting of suspicion. • If you are able to refute the suspicion prior to sending the report, but within the two-working day period, then you should not send the report.

STR REPORTING GUIDELINE • Guidelines for Financial Institutions on Suspicious Transactions Reporting, No. 06

STR REPORTING GUIDELINE • Guidelines for Financial Institutions on Suspicious Transactions Reporting, No. 06 of 2018 issued on 06. 08. 2018 • Guideline Covers, – Prerequisites for Development of Suspicion – Suspicion / timing of reporting / report content – Suspicion indicators 18

AFTER REPORTING AN STR If there is no suspension of Transactions Carry out business

AFTER REPORTING AN STR If there is no suspension of Transactions Carry out business as usual with the customer Any further developments related to the customer’s transactions, FIU should be informed • • Opening of further accounts Request for closure of accounts 19

AFTER REPORTING AN STR Tipping Off is Prohibited • As per Sec 9 of

AFTER REPORTING AN STR Tipping Off is Prohibited • As per Sec 9 of the FTRA, a person should not disclose any other person that • A report has been made to the FIU • A suspicion has been formed • Other information has been submitted to the FIU. 20

AM I PROTECTED ? Sec 12 FTRA • No civil, criminal or disciplinary proceeding

AM I PROTECTED ? Sec 12 FTRA • No civil, criminal or disciplinary proceeding lie against any person or institution reporting STRs under the Act in Good Faith 22

Contact Details THE FINANCIAL INTELLIGENCE UNIT CENTRAL BANK OF SRI LANKA 30, JANADHIPATHI MAWATHA,

Contact Details THE FINANCIAL INTELLIGENCE UNIT CENTRAL BANK OF SRI LANKA 30, JANADHIPATHI MAWATHA, COLOMBO-1 SRI LANKA Tel: (94) 11 2 477 125 / 509/204 Fax: (94) 11 2 477 692 EMAIL : fiu@cbsl. lk Web : www. fiusrilanka. gov. lk

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