FIU - STR Red Flags

Assessing STRs Established processes Factors influencing the assessment of STRs - Established processes Jurisdictional business activities Operational priorities of law enforcement etc Countries of risk Feedback on the investigative results of STRs Information on the subjects from open and confidential sources Known typologies and indicators

Establishing suspicion More suspicious additional information compounds the complexity, strangeness, lack of legitimate rationale, etc. Less suspicious additional information provides insight into legitimate rationale.

Proportionality – The ‘Suspicion Test’ 0% ------------------------------------------ 100% No Suspicion Suspicion Belief Absolute Knowledge The Proportionality test or Line of Suspicion test can be used to show that as we gather more information, our thoughts can also move from having no suspicion, to suspecting something has happened, to believing it has happened and finally having absolute knowledge something has happened. The further along the line we travel, the more justification is found for the kind of intrusive actions Financial Investigation can create such as gaining access to a suspects Bank account.

Utilizing indicators in analytical reports FIU's uses indicators of ML/TF to meet its disclosure thresholds FIU's includes these indicators in case disclosures because they transfer expert knowledge from practitioners (report writer) to consumers (report reader). Indicators also allow an FIU to accentuate a particular set of transactions or highlight a method of operation by the crime group.

What makes a good STR? Many transactions that are considered suspicious aren’t necessarily the most useful to investigators. For example… “Mr. XXXXX entered Thai Bank and deposited .5 million USD to his personal bank account. The money was presented in pre packaged bill bundles.”

What makes a good STR? Good STRs identify the following: Indicators of money laundering. Patterns of financial transactions. Subject identifying information (KYC info.). If the matter has already been referred to police. Counter-party information.

What makes a good STR? Good STRs identify the following: A suspected predicate offence. Review of the subject’s bank account activity. Beneficial ownership of businesses. Nominees potentially acting for subject. Familial or business relationships.

Indicators Indicators are observable events that point to the possibility of specific activities occurring. The more indicators of an activity the greater the likelihood or probability of it occurring.

Indicators Examples include - Cash deposits made in different bank branches within a short time frame Suspect appearance notes (old, covered in powder) Lack of economic explanation Transfers to accounts on which there are no previous transactions Transfers followed by cash withdrawals More concern about speed than costs Transactions irregular to those normally performed by subject

Most Common Indicators Atypical business account behaviour Unusual explanation for business/account behaviour/activity Media coverage of account holder’s activities Possible client relationship to previous crime Suspicious activity of client associates Concealment of beneficial owner of funds Rapid offshore transfer after funds deposited Atypical or uneconomical fund transfer to/or from foreign jurisdiction Insufficient explanation for source of funds Customers sending and receiving wire transfers to/from financial haven countries

TF Cases Sending or receiving funds by international transfers from and/or to locations of specific concern Atypical business/account behaviour Charity/Relief organization linked to transactions Large scale cash transactions Media coverage of account holder’s activities Ongoing investigation Large and/or Rapid Movement of Funds

TF Cases Multiple transactions below threshold Possible link to criminal activity Rapid creation and withdrawal of funds from account Use of same branch or similar branches on multiple instances when a single transaction would be more efficient. Use of false/stolen identities Wire transfers to and from multiple relief and/or charitable organizations, domestic and foreign Related companies (e.g. same owners, managers, addresses, phone numbers) Multiple entities reporting suspicions

Establishing suspicion Conduct a FI database search to identify any suspicious profiles such as - Structuring Smurfing Large value transactions with no rationale Unusual transaction behaviour Unusual transaction pattern

Additional information Is related to known typologies Has clear links to criminal activity Includes typologies that are well known and considered to be high risk Includes well known subjects involved in high risk transactions Involves a geographic location which is regarded as high risk Contains information that states whether the transaction has, or has not been executed

What is the FIU's role to improve STR quality? FIU's collaborates with supervisors to provide guidance on public websites to what sort of activity we are looking for in STRs. FIU's supports supervisors outreach to reporting entities and coaches them on better detecting/reporting techniques. FIU's with the Supervisors publicly applauds the efforts of reporting entities in cases where they have helped. In the event of non-compliance with FIU's support supervisors issuing of fines against reporting entities.

What happens if STR quality is poor - Rating Priority Low Priority If a report is considered to be of low priority, no further action is required. Medium Priority If a report is considered to be of medium priority then a decision will made as to either flag the report for ongoing scrutiny, or conduct a more thorough analysis. High Priority If a report is considered to be of high priority, it will require full analysis

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