STR or SAR? What is the difference?
They serve the same purpose. The name depends on where you are. Here is what every compliance professional and business should know about suspicious activity reporting.
STR and SAR are the same obligation under different names. Suspicion is enough to file, proof is not required, and telling the customer (tipping off) is itself an offence.
STR or SAR?
Have you ever wondered whether they are different?
They serve the same purpose, but the name depends on the jurisdiction.
➡️ SAR (Suspicious Activity Report) is commonly used in the US and UK
➡️ STR (Suspicious Transaction Report) is commonly used in many EU Member States and other jurisdictions
When a business identifies transactions or activities that may be linked to money laundering or terrorist financing, it must report them to its national Financial Intelligence Unit (FIU).
Examples include FinCEN in the US, the UKFIU in the UK, FIU Germany, and TRACFIN in France.
What you should note
➡️ You do not need proof. Reasonable suspicion is enough
➡️ Telling a customer that they have been reported, known as tipping off, is prohibited under AML laws
Why does this matter?
The SEC recently fined Merrill Lynch $7.5 million for failing to file numerous SARs. The issue was not money laundering itself, but the failure to report suspicious activity.
Every unfiled report is a lead investigators never received. That is why regulators treat reporting failures seriously even when no laundering is proven.
What does AML regulation say?
FATF Recommendation 20 requires reporting entities to report suspicious transactions promptly to their national FIU. Similar obligations exist across US, UK and EU AML frameworks.