Suspicious Transaction Reports (STRs) are an essential part of the cryptocurrency ecosystem. They are reports sent by exchanges, wallets, and other financial service providers to alert law enforcement and regulatory agencies of any suspicious activity related to the movement of funds.
The cryptocurrency industry has grown exponentially in recent years, and with this growth has come an increased need for transparency and compliance with government regulations. Suspicious Transaction Reports (STRs) are one of the ways that exchanges, wallets, and other financial service providers help to ensure that the cryptocurrency industry remains compliant with the laws and regulations that govern it. These reports are used to help investigate and prevent money laundering, fraud, and other criminal activities. They can also be used to identify potential links between transactions and individuals or organizations.
The FNTT carried out a strategic sectoral analysis of virtual currency operators providing services in Lithuania and found that of the 195 operators analyzed, around 90% do not provide the required information to the FNTT.
This analysis was carried out in order to assess the activities related to virtual currencies and the risks they pose.
According to the provisions of the Law on the Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania (AML/CFT Law), virtual currency operators are required to report to the FNTT:
· the persons designated as managers responsible for the implementation of AML/CFT and for cooperation with the FNTT;
· suspicious monetary operations or transactions;
· to report cash/virtual currency transactions equal to or exceeding EUR 15,000.
"The biggest jump in the establishment of virtual currency operators in Lithuania is expected in 2022. By mid-October, 788 companies have already notified the start of their operations. However, almost 90% of the companies analyzed have never reported suspicious money transactions or transactions equal to or exceeding €15,000 to the FNTT. Here we see a risk that the inadequate implementation of anti-money laundering measures could create a breeding ground for criminal activities", says FNTT Director Rolandas Kiškis.
According to Mr. Kiškis, these risks are partly confirmed by the planned inspections of companies providing virtual currency services, which have shown that companies are not implementing all the measures to prevent money laundering and terrorist financing and that there are serious gaps in the prevention of money laundering and terrorist financing in some companies.
Criteria for Suspicious Transactions
There are a variety of criteria that can be used to determine whether a transaction is suspicious. These criteria can include the source of funds, the size of the transaction, the frequency of the transaction, and any other unusual activity that may be associated with the transaction.
In addition, exchanges, wallets, and other financial service providers should be aware of any red flags that may indicate suspicious activity. These can include things like sudden or large deposits or withdrawals, multiple transactions from the same source, or transactions that are not consistent with the customer’s typical activity.
Reports of suspicious monetary transactions (STR)
Goal
Encourage financial institutions and other obliged entities to improve the quality of suspicious transaction reports submitted to the FNTT.
Suspicious Transaction Report (STR)
Provision of information by financial institutions and other obliged entities to the FNTT that the activities of a particular customer may be indicative of money laundering or terrorist financing.
Legal basis
Financial institutions and other obliged entities, if they discover that their client is carrying out a suspicious monetary operation or transaction, regardless of the amount of the monetary operation or transaction, must suspend the operation or transaction and report the operation or transaction to the Financial Crimes Investigation Service, and attorneys or assistant attorneys - to the Bar Association of Lithuania, no later than within 3 working hours from the time of suspension of the monetary transaction or transaction. For more information see Article 16(2) of the PPTFPĮ.
Financial institutions and other obliged entities must notify the Financial Crimes Investigation Service without delay, and no later than one working day after such knowledge or suspicion arises if they know or suspect that assets of any value are directly or indirectly derived from or involved in a criminal offense, or if they know or suspect that such assets are related to terrorist financing. For more information: Article 16(1) of the PPTFPĮ.
Financial institutions and other obliged entities are given the information that the client intends to or is attempting to carry out a suspicious monetary transaction must immediately inform the Financial Crimes Investigation Service immediately, and attorneys or assistant attorneys must report to the Lithuanian Bar Association. For more information see article 16(3) of the PPTFPĮ.
Suspicious monetary transaction
A monetary transaction or a transaction involving property suspected of being the direct or indirect proceeds of a criminal offense or participating in such conduct and/or is suspected of being involved in terrorist financing. For more information: Article 2(9) of the PPTFPĮ.
Ways to report
· The main one is the FNTT's external data portal.
· Telephone (8 5) 271 7498, (8 5) 271 6686.
· E-mail: dokumentas@fntt.lt; ppps@fntt.lt.
Information on the sender of the STR
Name, surname, phone, email.
Notification information
It is essential that the information provided in the STR is as accurate and complete as possible.
The information provided must identify and describe the essential elements of the information:
a) What? - Information describing the natural and/or legal persons mentioned in the notification;
Natural person - name, surname, personal identification number, address, account number (for foreigners - date of birth, personal identification number if available), contact information (telephone numbers, e-mail addresses).
Legal entity - name, company code, contact details (phone numbers, email addresses), manager, beneficiary, account number.
Where the operation or transaction is carried out in virtual currency and the beneficiary cannot be identified, the Internet Protocol (IP) address, e-mail address, address of the depositary virtual wallet, and the operator of the depositary virtual wallet or the operator of the virtual currency exchange, and the unique number of the transaction.
b) What did the customer do or what product was used to carry out the suspicious transaction or transaction (e.g. bank transfer, cash transaction, credit cards, insurance, leasing, loan products, currency, cryptocurrency, etc.)?
c) Give the chronological sequence of events. When was the monetary transaction or transaction carried out? Was the monetary operation or transaction stopped? If not, for what reasons?
d) Why did the client's activities arouse suspicions (exact, clear, coherent description of the situation)?
e) Where did the suspicious transaction take place? Please provide the exact address, and if it is a monetary transaction, please provide account numbers, names of banks, Fintechs, and/or other institutions.
f) Avoid acronyms and jargon.
g) If there is a lot of information, divide it into paragraphs, according to the sequence or logic of events, or attach a separate document with the full description.
Annexes
The customer account statements, copies of invoices, copies of documents, current SWIFT messages, customer questionnaires, customer correspondence and other documents that are relevant and support the information in the message.
FNTT feedback
X 1. STR description was unclear, no relevant annexes were provided.
X 2. STR description is clear, and no necessary annexes are provided.
X 3. STR description is clear, and necessary annexes are provided, but the names of the entities are not precise.
+ 4. The description of the STR is detailed and clear, and the necessary annexes are provided.
+ 5. The STR has been put to good use, the description is clear and concise, and the necessary annexes are provided.
Additional information
The information requested by the FNTT must be provided without delay and within one working day at the latest.
Protection of information
It is forbidden to inform the client or any other person that information about the client's monetary operations or transactions or any other information has been provided to the Financial Crimes Investigation Service or any other supervisory authority. For more information, see Article 23 of the PPTFPĮ.
What needs to be understood
Exchanges, wallets, and other financial service providers should have a comprehensive compliance program in place to ensure that they are in compliance with the applicable regulations. This program should include measures such as training staff on the applicable regulations, conducting customer due diligence, and monitoring customer activity. In addition, there are a variety of tools and resources available to help them comply with the applicable regulations.
STRs are an essential tool for ensuring transparency and compliance with government regulations. By understanding the criteria, practices, and requirements for submitting an STR, exchanges, wallets, and other financial service providers can ensure that they are in compliance with the applicable regulations.
Comments