Suspicious Transaction Reporting: A Practical Guide

When is the threshold crossed?

The legislation sets three standards, and they are not the same thing:

• Knowledge. You know.
• Suspicion. More than speculation, less than proof. A degree of satisfaction that something is not right.
• Reasonable grounds to suspect. An objective test. Would a reasonable person, with your training and the facts in front of you, have suspected?

That third limb catches firms who tell themselves they were not sure. The law does not require certainty. It requires reasonable grounds, assessed on the facts available at the time.

The internal escalation step

Staff do not file STRs. Staff escalate to the MLRO, who decides. That step does three jobs:

1. It protects the member of staff, who has discharged their obligation by reporting internally.
2. It centralises the decision with the person who can see the whole client picture.
3. It creates the audit trail showing when the firm first knew.

The MLRO’s decision

The MLRO assesses the internal report and either files or does not. No STR filed is a valid outcome, provided the reasoning is recorded. An internal report log with decisions and dates against every entry is exactly what an inspector wants to see. A log with escalations and no recorded outcomes is a finding.

How and where to file

Ireland requires dual reporting. One filing is not enough:

• FIU Ireland, through the Garda online system, goAML.
• The Revenue Commissioners, through their own channel.

The statutory test is as soon as practicable. In practice, a filing made within 24 to 72 hours of the MLRO’s decision is defensible. Weeks later is not, and the gap will be the first thing anyone asks about.

What goes in an STR

• Identification of the subject, and of any connected parties
• The transaction or activity: amounts, dates, accounts, counterparties
• The specific grounds of suspicion, written as facts rather than conclusions
• What documents the firm holds, and where
• Any earlier reports on the same subject, cross-referenced

“The client seemed evasive” is not grounds. “The client declined three times to explain the source of a €240,000 lodgement, then withdrew the instruction” is.

Tipping off: the hardest part

Section 49 makes it an offence to disclose anything likely to prejudice an investigation. That includes telling the client, and it includes telling colleagues who have no need to know.

The practical difficulty is that the relationship usually continues while the report sits with the FIU. Staff have to carry on normally, answer the phone as they always would, and say nothing. Firms that have never rehearsed this are the ones where somebody says too much.

What happens after you file

Usually very little, visibly. The FIU may acknowledge receipt, may come back for more information, or may issue a direction not to proceed with a transaction. Silence is the normal case and does not mean the report was wrong.

Filing does not oblige a firm to end the relationship, and ending it abruptly can itself amount to tipping off. That decision is separate, and should be taken and recorded on its own terms.

Six failures that come up repeatedly

1. Filing weeks after the suspicion arose, with no explanation for the gap
2. Grounds written so vaguely the report cannot be acted on
3. Filing to FIU Ireland and forgetting Revenue, or the reverse
4. MLRO decisions not to file that were never written down
5. Tipping off, usually by a well-meaning member of staff
6. Staff who did not escalate because nobody had told them what suspicion looks like in their own product

Training is the fix

Every failure on that list except the third is a training failure. Staff report what they have been taught to recognise, and stay quiet about what they have been taught to keep quiet about.