b) Suspicious Transaction Reports (STRs)

Bank files all suspicious transactions as mentioned in the PMLA Rules to Financial
Intelligence Unit – India (FIU-IND). While determining suspicious transactions, bank is
guided by definition of suspicious transaction contained in PMLA Rules as amended from
time to time. Bank also files Suspicious Transaction Reports (STR) to FIU-IND for
Mobile Banking Transactions as in case of normal banking transactions.
Definition of Suspicious Transaction in PMLA Rules:
“Suspicious Transaction" means a transaction whether or not made in cash which, to a
person acting in good faith –
a. Gives rise to a reasonable ground of suspicion that it may involve the proceeds of
crime; or
b. Appears to be made in circumstances of unusual or unjustified complexity; or
c. Appears to have no economic rationale or bonafide purpose; or
d. Gives rise to a reasonable ground of suspicion that it may involve financing of the
activities relating to terrorism.
It is likely that in some cases transactions are abandoned / aborted by customers on being
asked to give some details or to provide documents. Branches should report all such
attempted transactions through the menu “AMLALERT” and Regional Offices should file
STRs on these attempted transactions, even if not completed by customers, irrespective of
the amount of the transaction.

Branches should submit STRs if they have reasonable ground to believe that the
transactions involve proceeds of crime generally irrespective of the amount of transaction
and/or the threshold limit envisaged to predict offences.

Branches should not put any restrictions on operations in the accounts where an STR has
been filed. Branch staff should keep the fact of furnishing STR strictly confidential, as per
PML rules. It should be ensured that there is no tip off to the customer at any level.

In the context of creating KYC-AML awareness among the staff and for generating alerts
for suspicious transactions, the indicative list of suspicious activities contained in
IBA's Guidance Note for Banks, January 2012 and given here below:
Indicative List of Suspicious Activities:
(1) Transactions Involving Large Amounts of Cash
a. Exchanging an unusually large amount of small denomination notes for those of
higher denomination;
b. Purchasing or selling of foreign currencies in substantial amounts by cash settlement
despite the customer having an account with the bank;
c. Frequent withdrawal of large amounts by means of cheques;
d. Frequent withdrawal of large cash amounts that do not appear to be justified by the
customer’s business activity;
e. Large cash withdrawals from a previously dormant/inactive/inoperative account, or
from an account which has just received an unexpected large credit from abroad;
f. Company transactions, both deposits and withdrawals, that are denominated by
unusually large amounts of cash, rather than by way of debits and credits normally
 associated with the normal commercial operations of the company, e.g. cheques,
letters of credit, bills of exchange etc.;
g. Depositing cash by means of numerous credit slips by a customer such that the
amount of each deposit is not substantial, but the total of which is substantial.
(2) Transactions that do not make Economic Sense
a. A customer having a large number of accounts with the same bank, with frequent
transfers of funds between different accounts;
b. Transactions in which assets are withdrawn immediately after being deposited,
unless the customer’s business activities furnish a plausible reason for immediate
withdrawal.
(3) Activities not consistent with the Customer’s Business
a. Corporate accounts where deposits or withdrawals are primarily in cash rather than
cheques.
b. Corporate accounts where deposits & withdrawals by cheque/foreign inward
remittances/any other means are received from/made to sources apparently
unconnected with the corporate business activity/dealings.
c. Unusual applications for DD/ Banker’s Cheque against cash.
d. Accounts with large volume of credits through DD/ Banker’s whereas the nature of
business does not justify such credits.
e. Retail deposit of many cheques but rare withdrawals for daily operations.
(4) Attempts to avoid Reporting/Record-keeping Requirements
a. A customer who is reluctant to provide information needed for a mandatory report, to
have the report filed or to proceed with a transaction after being informed that the
report must be filed.
b. Any individual or group that coerces/induces or attempts to coerce/induce a bank
employee not to file any reports or any other forms.
c. An account where there are several cash deposits/withdrawals below a specified
threshold level to a avoid filing of reports that may be necessary in case of
transactions above the threshold level, as the customer intentionally splits the
transaction into smaller amounts for the purpose of avoiding the threshold limit.
(5) Unusual Activities
a. An account of a customer who does not reside/have office near the branch even
though there are bank branches near his residence/office.
b. A customer who often visits the safe deposit lockers immediately before making
cash deposits, especially deposits just under the threshold level.
c. Funds coming from the list of countries/centres which are known for money
laundering.
(6) Customer who provides Insufficient or Suspicious Information
a. A customer/company who is reluctant to provide complete information regarding the
purpose of the business, prior banking relationships, officers or directors, or its
locations.
b. A customer/company who is reluctant to reveal details about its activities or to
provide financial statements.
c. A customer who has no record of past or present employment but makes frequent
 large transactions.
(7) Certain Suspicious Funds Transfer Activities
a. Sending or receiving frequent or large volumes of remittances to/from countries
outside India.
b. Receiving large DD remittances from various centers and remitting the consolidated
amount to a different account/centre on the same day leaving minimum balance in
the account.
c. Maintaining multiple accounts, transferring money among the accounts and using
one account as a master account for wire/funds transfer.
(8) Certain Bank Employees arousing Suspicion
a. An employee whose lavish lifestyle cannot be supported by his or her salary.
b. Negligence of employees/wilful blindness is reported repeatedly.
(9) List of alert Indicators of suspicious activities/transactions to be monitored by
the operating staff at branch level:

S.No. Alert Indicator Indicative Suspicion

1 Customer left without opening Customer did not open account after being
account informed about KYC requirements
2 Customer offered false or forged Customer gives false identification documents or
identification documents documents that appears to be counterfeited,
altered or inaccurate
3 Identity documents are not verifiable Identity documents presented are not verifiable
i.e. Foreign documents etc.
4 Address found to be non-existent Address provided by the customer is found to be
non-existent
5 Address found to be wrong Customer not staying at address provided during
account opening
6 Difficult to identify beneficial owner Customer uses complex legal structures or where
it is difficult to identify the beneficial owner
7 Customer is being investigated for Customer has been the subject of inquiry from
criminal offences any law enforcement agency relating to criminal
offences
8 Customer is being investigated for Customer has been the subject of inquiry from
TF offences any law enforcement agency relating to TF or
terrorist activities
9 Adverse media report about criminal Match of customer details with persons reported
activities of customer in local media / open source for criminal offences
10 Adverse media report about TF or Match of customer details with persons reported
terrorist activities of customer in local media / open source for terrorism or
terrorist financing related activities
11 Customer did not complete Customer did not complete transaction after
transaction queries such source of funds etc.
12 Customer is nervous Customer is hurried or nervous
13 Customer is over cautious Customer over cautious in explaining
genuineness of the transaction.
14 Customer provides inconsistent Customer changes the information provided after
information more detailed information is requested.
Customer provides information that seems
minimal, possibly false or inconsistent.
15 Customer acting on behalf of a third Customer has vague knowledge about
 party amount of money involved in the transaction.
Customer taking instructions for conducting
transactions
Customer is accompanied by unrelated
individuals.
16 Multiple customers working as a Multiple customers arrive together but
group pretend to ignore each other

17 Customer avoiding nearer branches Customer travels unexplained distances to

conduct transactions
18 Customer offers different Customer offers different identifications on
identifications on different occasions different occasions in an apparent attempt to
avoid linkage of multiple transactions
19 Customer wants to avoid reporting Customer makes inquiries or tries to convince
 staff to avoid reporting
20 Customer could not explain source Customer could not explain source of funds
of funds
21 Transaction is unnecessarily Transaction is unnecessarily complex for its
complex stated purpose
22 Transaction has no economic The amounts or frequency or the stated reason of
rationale the transaction does not make sense for the
particular customer
23 Transaction inconsistent with Transaction involving movement of which is
business inconsistent with the customer’s business
24 Unapproved inward remittance in Foreign remittance received by NPO not approved
NPO by FCRA
25 Complaint received from public Complaint received from public for abuse of
account for committing fraud etc.
26 Alert raised by agent Alert raised by agent for suspicion
27 Alert raised by other institution Alert raised by other institutions, subsidiaries or
business associates including cross border
referral

Branches should report any of the above suspicious behaviour of the

customer / walk-in-customer noticed by them through CBS menu
“AMLALERT”.

Manner and Procedure of filing STRs:

a. Assistant Money Laundering Reporting Officers (AMLROs) should examine /
scrutinize the Alerts assigned to them by the AML Software from money
laundering and terrorist financing angle and should arrive at conclusion
whether the transaction/s behind the Alert is/are suspicious in nature.
b. AMLROs should prepare the STRs in Excel Format and send it to Principal
Officer through E-mail within four days of arrival of conclusion that transaction
is suspicious one. Documents related to the STRs as received from the
branches should also be submitted to Principal Officer at Head Office for his/
her examination.
c. Principal Officer examines such STRs and records his reasons for treating
transaction or a series of transactions as suspicious and reports to FIU-IND,
New
Delhi within -7- days of arriving at conclusion that transaction is suspicious one.
Generation of Alerts through System for detection of Suspicious
Transactions for Domestic Branches:
1. As a part of transaction monitoring mechanism, bank has put in place an
appropriate software application to throw alerts when the transactions are
inconsistent with risk categorization and updated profile of customers.
2. Bank has procured web based AML software FISERV (Financial Crime
 Manager) for CBS for generating / throwing alerts on the Risk Views defined
by the bank for effective identification and reporting of suspicious
transactions.
Alerts generated by the AML Solution are directly assigned to AML Team of
Centralized Transaction Monitoring Unit (CTMU), who examine the same and
report STR cases to Principal Officer for reporting STRs to FIU-IND, New Delhi.