A suspicious transaction report (STR) is a document that financial institutions must file with the relevant authorities when they detect or suspect any activity that may be related to money laundering, terrorist financing, or other criminal offences. An STR should include the details of the customer, the transaction, the reason for suspicion, and any other relevant information.
One of the indicators of suspicious activity is the use of financial instruments, such as checks, money orders, or cashier’s checks, that are drawn on other institutions and deposited in amounts under the currency reporting thresholds. This may suggest that the customer is trying to avoid the detection and reporting of large cash transactions, which is a technique known as structuring or smurfing. Structuring is illegal and may indicate that the customer is laundering money from illicit sources or evading taxes.
Another indicator of suspicious activity is the use of financial instruments that are sequentially numbered, meaning that they have consecutive serial numbers. This may suggest that the customer has obtained the instruments from the same source or issuer, and that they are using them to launder money or finance illegal activities. Sequentially numbered instruments may also indicate that the customer is involved in fraud, such as check kiting or counterfeit checks.
Therefore, if a bank conducts a quarterly review on a retail customer’s account and finds that the customer has made a number of large deposits of financial instruments drawn on other institutions in amounts under the thresholds, and that the instruments were sequentially numbered, the bank will most likely file an STR. This is because this activity does not fit the customer’s historical profile, and it raises a high level of suspicion that the customer is engaged in money laundering or other criminal activities.
CAMS Study Guide - 6th Edition, Chapter 4, Section 4.2, page 108
Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations, Question 5, page 7
Anti-money laundering – handling suspicious activity, Section 6.3, page 3
Tell us about suspicious activity that may be linked to money laundering, Section 3, page 1
