2.3 Transaction Monitoring and STR Reporting
2.3.1 Transaction Monitoring
Where possible, transaction monitoring systems used to monitor activity in the accounts of the RHP should also be equipped to identify breaches of the permitted services by RHP listed in Part I section 4.1. The transaction monitoring system used by LFIs should also be equipped to identify RHP that are using the LFI's accounts to conduct their business and to move funds on behalf of customers while attempting to conceal this activity from the LFI. Red flags for concealed activity appear below. If an LFI's automated transaction monitoring system is not capable of alerting on these red flags, LFIs should have in place manual monitoring, such as management information systems that are capable of doing so. Frequent deposits by multiple individuals into a single bank account, followed by international wire transfers and /or international withdrawals through ATMs.
• Money being transferred at regular intervals to international locations known to be clearing houses for remittances. • An account being used as a temporary repository with the funds quickly transferred. • Usage of third-party accounts to disguise and to avoid detection by authorities. • Wire transfers frequently sent by traders to foreign countries that do not seem to have any business connection to the destination countries. • Business accounts used to receive or disburse large sums of money but show virtually no reasonable business-related activities such as payment of payrolls, invoices etc. • Frequent deposits of third-party checks and money orders into business or personal accounts. • Frequent international wire transfers from bank accounts that appear inconsistent with stated business activities. • Sudden change in pattern of financial transactions from low value international fund transfers to large value transfers.
2.3.2 STR Reporting
As required by Article 15 of AML-CFT Law and Article 17 of AML-CFT Decision, LFIs must file an STR, or SAR or other report types with the FIU when they have reasonable grounds to suspect that a transaction, attempted transaction, or funds constitute, in whole or in part, regardless of the amount, the proceeds of crime, are related to a crime, or are intended to be used in a crime. STR filing is not simply a legal obligation; it is a critical element of the UAE's effort to combat financial crime and protect the integrity of its financial system. STR filings are essential to assist concerned UAE authorities, such as law enforcement, in detecting criminal actors and preventing the flow of illicit funds through the UAE financial system.
In addition to the requirement to file an STR when an LFI suspects that a transaction or funds are linked to a crime, LFIs should consider filing an STR in the following situations:
• A potential customer decides against opening an account or purchasing other financial services after learning about the LFI's CDD requirements; • A current customer cannot provide required information about its business or its beneficial owners; • A customer cannot adequately explain transactions, provide supporting documents such as invoices, or provide satisfactory information about its counterparty; • The LFI is not confident, after completing CDD procedures, that it has in fact identified the individuals owning or controlling the customer. In such cases, the LFI should not establish the business relationship, or continue an existing business relationship; or • If the LFI believes that a customer may be acting as an unregistered hawaladar.
Please see also the CBUAE's Guidance for LFIs on Suspicious Transaction Reporting for further information.