Legal Definitions - STR

An STR stands for a Suspicious Transaction Report.

A Suspicious Transaction Report (STR) is a formal document that financial institutions and certain other businesses are legally required to file with a government regulatory body when they observe transactions or activities that appear unusual or potentially linked to illegal financial activities. These activities could include money laundering, terrorist financing, or various forms of fraud. The purpose of an STR is to alert law enforcement to potential criminal behavior, allowing them to investigate and prevent financial crimes.

Here are some examples of situations that might lead to the filing of an STR:

• Example 1: Unexplained Large Cash Deposits

  A small, local dry cleaning business, which typically handles modest daily cash transactions, suddenly begins receiving a series of very large cash deposits totaling hundreds of thousands of dollars over a short period. The deposits are made by an individual who is not the owner and has no clear connection to the business's operations. The individual also attempts to make several deposits just under the $10,000 reporting threshold.

  How this illustrates an STR: The bank's compliance officer would notice these unusual and structured deposits, which are far outside the business's normal financial activity. This pattern raises suspicion of money laundering, as the individual might be trying to "clean" illicit funds by funneling them through a legitimate business account and avoiding standard currency transaction reporting. The bank would then be obligated to file an STR with the relevant financial intelligence unit.

• Example 2: Rapid International Transfers to High-Risk Jurisdictions

  A new customer opens a personal bank account and, within a week, attempts to initiate multiple large wire transfers to different individuals and entities located in countries known for high financial crime risk or political instability. When questioned about the purpose of these transfers, the customer provides vague or inconsistent explanations, or becomes agitated and refuses to provide further details.

  How this illustrates an STR: The rapid movement of significant funds shortly after account opening, coupled with transfers to high-risk areas and the customer's evasive behavior, would trigger strong suspicion for the bank. This scenario could indicate potential terrorist financing, fraud, or other illicit activities. The bank's anti-money laundering (AML) system would flag these transactions, leading to an investigation by the compliance team and, if suspicions are confirmed, the filing of an STR.

• Example 3: Unusual Behavior in a Non-Financial Business Transaction

  A luxury car dealership receives an offer from a buyer who insists on paying for a high-end vehicle, valued at over $200,000, entirely in cash. The buyer shows little interest in negotiating the price, inspecting the car, or understanding the vehicle's history, and seems unusually eager to complete the transaction quickly without standard financing or background checks.

  How this illustrates an STR: While not a bank, certain non-financial businesses, like high-value goods dealers in some jurisdictions, also have STR filing obligations. The buyer's insistence on a large cash payment for a luxury item, combined with a lack of typical buyer diligence and eagerness to rush the transaction, could suggest an attempt to launder illicit funds through the purchase of an asset. The dealership would be required to report this suspicious activity via an STR to the appropriate authorities.