Guidance on Reporting

Suspicious Transaction Report

for
The Reporting Organization

Bangladesh Financial Intelligence Unit

January 2019
 Table of Contents

A. Preamble 1
B. Reporting Requirement 1
C. Reporting Process 2
C.1 Identification of STR/SAR 2
C.2 Evaluation 3
C.3 Disclosure 4
D. Documenting Reporting Decisions 5
E. Reporting Guidance 5
E.1 Some Special Scenarios for Reporting 5
F. Tipping Off 6
G. Penalty 6
G.1 Penalty of Tipping Off 7
H. Safe Harbor Provision 7
I. Red Flags 7

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A. Preamble
This document is issued as per power conferred in Section 23(1)(d) of Money Laundering
Prevention Act, 2012 (MLPA) and in Section 15(1)(d) of Anti Terrorism Act, 2009 (ATA)
for all the reporting organizations defined under Section 2(w) of MLPA and Section 2(20)
of ATA.
The purpose of this guidance note is to assist the Reporting Organizations (RO) to obtain
a practical and comprehensive approach in recognizing and reporting suspicious activity as
the ROs are obligated to submit Suspicious Transaction Report (STR)/ Suspicious Activity
Report (SAR) to Bangladesh Financial Intelligence Report (BFIU) required under the
MLPA, 2012 and ATA, 2009 and the BFIU Directives for the prevention of Money
Laundering and Terrorist Financing.
The Money Laundering and Terrorist Financing (ML/TF) is an ever evolving process and
individuals involved in such activities are continually attempting to exploit services and
products offered by Financial Institutions and Designated Non Financial Businesses and
Professions (DNFBP) in an effort to disguise the true nature of their illicit proceeds.
This guidance note is a summary of non-exhaustive steps and best practices to be adopted by
the ROs when dealing with the execution and/or review of clients’ transactions and activities
and the assessment of suspicion.
B. Reporting Requirement
Suspicious activity can be identified both during the on-boarding or ongoing due diligence
of a client as well as during the transaction monitoring process and may be raised by any
employee of a reporting organization.
Under Section 25(1)(d) of MLPA, 2012, ROs shall have to report any doubtful transaction
or attempt of such transaction as defined under Section 2(z) of the same act as suspicious
transaction report to the BFIU immediately on its own accord.
Definition of Suspicious Transaction
As per Section 2(z) of MLPA 2012 Suspicious Transaction means such transactions
 which deviates from usual transactions
 of which there is ground to suspect that
 The property is the process of an offense
 It is financing to any terrorist activity, a terrorist group or an individual terrorist
 Which is for the purpose of this Act, any other transaction or attempt of transaction
delineated in the instruction issued by BFIU from time to time.
As per Section 2(16) of ATA, 2009, Suspicious Transaction means such transactions
 which deviates from usual transactions
 Which invokes presumption that
 it is the proceeds of an offence under this Act
 it relates to financing of terrorist activities or a terrorist person or entity

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  For the purpose of this Act, any other transaction or attempt of transaction delineated in
the instruction issued by BFIU from time to time.
Suspicious Activity (SA) arises from suspicion relating to general behavior of the
person in question which creates the knowledge or belief that he or she may be involved in
illegal activities out of which proceeds might be generated. Any suspicious attempted
transaction also fall in this category.
C. Reporting Process
The final output of an Anti Money Laundering (AML) & Combating Financing of Terrorism
(CFT) compliance program is reporting of suspicious transaction or reporting of suspicious
activity. Suspicious Transaction Report (STR) or Suspicious Activity Report (SAR) is an
excellent tool for mitigating or minimizing the AML & CFT risk for ROs. Therefore it is
necessary to find out the suspicious transaction and suspicious activity for the safety and
soundness of the ROs.
In order to prepare an effective intelligence report or to have leads for a quality report, a
complete STR is an essential requirement, i.e. the information submitted must be sufficient
and complete to establish a connection to be made between the person(s) and the
suspicious activity/transaction.
Generally STR/SAR means a formatted report of suspicious transactions/activities where
there is reasonable grounds to believe that funds are the proceeds of predicate offence or may
be linked to terrorist activity or the transactions are not seems to be usual manner. Such
report is to be submitted by ROs to the competent authorities i.e. to BFIU. Suspicion
basically involves a personal and subjective assessment. The reporting organizations have to
assess whether there are reasonable grounds to suspect that a transaction is related to money
laundering offence or a financing of terrorism offence.
In case of reporting of STR/SAR, reporting organizations should conduct the following 3
stages:
C.1. Identification of STR/SAR
Identification of STR/SAR may be started identifying unusual transaction and activity. Such
unusual transaction may be unusual in terms of complexity of transaction, nature of
transaction, volume of transaction, time of transaction etc. Generally the detection of
something unusual may be sourced as follows:
 Comparing the KYC profile, if any inconsistency is found and there is no reasonable
explanation;
 By monitoring customer transactions;
 By using red flag indicators.
A transaction which appears unusual is not necessarily suspicious. Even customers with a
stable and predictable transaction profiles will have periodic transactions that are unusual for
them. Many customers will, for perfectly good reasons, have an erratic pattern of transactions
or account activity. So the unusual is, in the first instance, only a basis for further enquiry,

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which may in turn require judgment as to whether it is suspicious. A transaction or activity
may not be suspicious at the time, but if suspicions are raised later, an obligation to report
then arises. Section-I provides some red flag indicators for identifying STR/SAR related to
ML & TF.
All suspicions reported to the CCU should be documented, or recorded electronically. The
report should include full details of the customer who is the subject of concern and as full a
statement as possible of the information giving rise to the suspicion. All internal enquiries
made in relation to the report should also be documented. This information may be required
to supplement the initial report or as evidence of good practice and best endeavors if, at some
future date, there is an investigation and the suspicions are confirmed or disproved.
The following chart shows the graphical presentation of identification of STR/SAR-

This stage is very vital for STR/SAR reporting. Depending on size, need and complexity of
ROs monitoring of unusual transactions may be automated, manually or both. Some ROs use
specialized software to detect unusual transactions or activities, however, the use of such
software can only be complemented managerial oversight and not be replaced the need for
constant monitoring of the accounts of customers. Monitoring mechanisms should be more
rigorous in high-risk areas of a RO and supported by adequate information systems to alert
management and other appropriate staffs of unusual /suspicious activity. Training of staff in
the identification of unusual /suspicious activity should always be an ongoing activity.
C.2. Evaluation
This part must be in place at branch level. After identification of STR/SAR at branch
level, BAMLCO shall evaluate the reported transaction or activity in an appropriate
manner and shall preserve his observations on it in a written format. If the transaction or
activity seems to be suspicious, it, along with all necessary supportive documents, has to
be sent to the Central Compliance Committee/Central Compliance Unit/Money
Laundering and Terrorist Financing Prevention Department/Division without any delay.
After receiving report from branch, Money Laundering and Terrorist Financing
Prevention Department/Division shall review whether the reported suspicious transaction

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or activity from the branch has been reported in an appropriate manner with all necessary
information, data and documents.

C.3 Disclosure
This is the final stage and ROs should submit STR/SAR to BFIU. After checking the
sufficiency of the required documents, Central Compliance Committee/Central
Compliance Unit/Money Laundering and Terrorist Financing Prevention
Department/Division shall submit a suspicious transaction/activity report to BFIU without
delay by using goAML web as per instruction mentioned in goAML Manual. Every stages
of evaluation ROs should keep records with proper manner.
Central Compliance Committee/Central Compliance Unit/Money Laundering and
Terrorist Financing Prevention Department/Division shall submit suspicious
transaction/activity report to BFIU if it identifies any transaction or activity as suspicious
even though the concerned branch did not identified as suspicious
For simplification, the flow chart given below shows overall STR/SAR evaluation and
reporting procedures:

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D. Documenting Reporting Decisions

In order to control legal risks or for future reference it is important that adequate records of
SARs and STRs are kept. This is usually done by the CAMLCO and would normally include
details of:
a) All SARs / STRs made;
b) How the BAMLCO handled matters, including any requests for further
information
c) Assessments of the information provided, along with any subsequent decisions
about whether or not to await developments or seek additional information;
d) The rationale for deciding whether or not to proceed with SAR/STR;
e) Any advice given or action taken about continuing the business relationship and
any relevant internal approvals granted in this respect.
These records can be simple or sophisticated, depending on the size of the business and the
volume of reporting, but they always need to contain broadly the same information and be
supported by the relevant working papers. The maintenance and retention of such records is
important as they justify and defend the actions taken by the BAMLCO and/or other
members of staff and should be made available to the Competent Authorities and BFIU upon
request.

For practical purposes and ease of reference, a reporting index could be kept and each
SAR/STR could be given a unique reference number.

E. Reporting Guidance

BFIU implemented a secured online reporting system namely the goAML, which requires
the ROs to submit SARs and STRs through this channel. The goAML Web application
provides a secure web based interface between the BFIU and its reporting organizations for
the electronic upload of reports such as XML files, filling out the online report forms or
sending XML files as attachments by secure e-mail, information sharing among stakeholders
and other information.
ROs shall submit STR/SAR by using goAML web as per instruction mentioned in goAML
Manual. (https://www.bb.org.bd/eservices.php). ROs can also submit STR/SAR manually by
using the format prescribed by BFIU (https://www.bb.org.bd/bfiu/reporting_forms.php). ROs
shall preserve all information on a reported STR until any further instruction by BFIU.
E.1. Some Special Scenarios for Reporting
(1) If a reporting organization fails to perform conducting Customer Due Diligence (CDD)
due to the non cooperation of customer and the collected information/data of the customer
appears unreliable, reporting organization should submit suspicious transaction/activity report
on such customers;

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(2) If Reporting Organization identifies any account or transaction in the name of listed or
proscribed person or entity under any United Nations Security Council Resolution or any
person or entity listed or proscribed by Bangladesh Government or any individual or entity
directly or indirectly under their control or association, Reporting Organization must stop
transaction of the account and report BFIU with detailed information within the next working
day;
(3) If any news on Financing of Terrorism and Financing of Proliferation of Weapons of
Mass Destruction is published in the media and if any account of any person or entity related
to that activity is maintained with the reporting organization, detailed information must be
reported to BFIU without any delay.
F. Tipping Off

A ‘tipping off’ offence occurs when any person discloses, either to the person who is the
subject of a suspicion or any third party, that:

a) Information or documentation on ML/TF has been transmitted to BFIU;

b) A SAR/STR has been submitted internally or to BFIU;

c) Authorities are carrying out an investigation/search into allegations of ML/TF;

Tipping-off may also occur in those cases when an employee approaches the client
to collect information about the internal on-going investigation, and through the
intense questioning, the client becomes aware of the investigation.

Section 6 of MLPA 2012 and FATF Recommendation 21 prohibits reporting organization,

their directors, officers and employees from disclosing the fact that an STR or related
information is being reported to BFIU. A risk exists that customers could be unintentionally
tipped off when the reporting organization is seeking to perform its CDD obligation in those
circumstances. The customer‘s awareness of a possible STR or investigation could
compromise future effort to investigate the suspected money laundering or terrorist financing
operation.

Reporting Organizations shall consider the confidentiality of the reporting of STR/SAR.

They should not make any behavior or performance that could tip-off the customer and
he/she (the customer) could be cautious.

Reporting Organizations shall report suspicious transaction/activity without performing

Customer Due Diligence (CDD) if there is reasonable ground that Tipping Off may take
place in the event of performing CDD for any transaction suspected to be related to ML &
TF.
G. Penalty

As per Section 25 (2) of MLPA, if any reporting organization fails to report STR/SAR, a fine
of at least taka 50 (Fifty) Thousand but not exceeding taka 25 (Twenty Five) lacs can be
imposed on the reporting organization. In addition to the fine, BFIU may cancel the license or

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the authorization for carrying out commercial activities of the said organization or any of its
branches, service centers, booths or agents, or as the cause may be, shall inform the
registration or licensing authority about the fact so as to be relevant authority may take
appropriate measures against the organization.

G.1. Penalty of Tipping Off

Under section 6 of MLPA, 2012, if any person, institution or agent empowered under this Act
divulges any information collected, received, retrieved or known by the person, institution or
agent during the course of employment or appointment, or after the expiry of any contract of
service or appointment for any purpose other than the purposes of this Act shall be punished
with imprisonment for a term not exceeding 2 (two) years or a fine not exceeding taka 50
(fifty) thousand or with both.

H. Safe Harbor Provision

In section (28) of MLPA, 2012 provides the safe harbor for persons submitting suspicious
reports.

As per Section 28 of MLPA, no suit or prosecution or administrative measures or any other

legal proceedings shall lie against any reporting organization or its Board of Directors or any
of its officers or staffs for anything which is done in good faith under this Act or Rules made
thereunder for which any person is or likely to be affected.

Disclosure of information in good faith by a reporting organization or by an employee or

director of such a reporting organization shall not constitute a breach of any restriction on
disclosure of information imposed by contract or by any legislative, regulatory or
administrative provision, and shall not involve the obliged entity or its directors or
employees in liability of any kind even in circumstances where they were not precisely aware
of the underlying criminal activity and regardless of whether the illegal activity actually
occurred.

I. Red Flags
Suspicion can be defined as
 A state of mind more definite than speculation but falling short of evidence-based
knowledge;
 A positive feeling of actual apprehension or
mistrust;
 A slight opinion, without sufficient
evidence.

The following red flags can be used as indicators of Suspicious Transaction or

Suspicious Activities:

1. Significant mismatch with financial status of the customer.

2. Fake documents & false information submitted by the customer.

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3. Customer is reluctant to provide documents.
4. Frequent cash transaction not aligned with the business or, profession of the customer.
5. Structuring.
6. Pay order & Demand Draft purchased or/and encashed without bona fide transaction.
7. Cheque kitting and fraudulent activity related to financial instruments.
8. Large number and amount of transaction with minimum balance.
9. Sudden pay off of loan or, multiple number of unpaid installments.
10. Account opened and transacted large amount in the name of non-earning members and
close aides.
11. Customer or beneficiary has link with terrorist activities or, terrorist financing or,
sanctioned organization.
12. Adverse media report against the customer or, beneficiary.
13. Transaction or activities related to TBML/TF related trade financing.
14. Transaction with high risk jurisdiction.
15. Suspicious cross border inward/ outward transaction.
16. Relationship with front company or Shell Company.
17. Use of funds by the NGO/NPO/ Co-operative inconsistent with the purpose.
18. An atypical incidence of pre-payment of insurance premiums.