AML/ATF Compliance: Some Thoughts About Reporting Suspicious Transactions
The failure to file Suspicious Transaction Reports (STRs) within thirty days can be a major liability for organizations subjected to a FINTRAC audit, exposing violators to substantial penalties and the publication of the penalties on the FINTRAC website. Much guidance about the indicators of suspect transactions has been released by FINTRAC in its Guidelines. Little has been said by FINTRAC, however, about the reporting threshold, “reasonable grounds to suspect” or RGS. That is unfortunate, because RGS is the large clue as to what Parliament intended when it comes to the decision to report suspicious transactions to FINTRAC.
RGS has its origins in the criminal law. It has been used as the threshold that police officers must have before engaging in limited, warrantless investigative techniques that engage a person’s expectation of privacy, but in a minimal way. A good example is a sniffer dog search for drugs in luggage at an airport.
RGS compares to the more common “reasonable grounds” or “reasonable and probable grounds” (RPG) to believe, which is the threshold which must be met before a police officer can arrest a person for a crime, or a judge can issue a warrant authorizing the search of a home.
The similarity between RGS and RPG is that both must be based on objectively discernable facts. But RGS is a lower standard, as it engages the reasonable possibility, rather than the probability, of an offence.
RGS should be assessed against the totality of the prevailing circumstances. Both favourable and unfavourable factors must be weighed in the course of arriving at any conclusion regarding reasonable suspicion. However, the conclusion need not be the only one that is possible from the circumstances. That is because RGS is intended to address the possibility of uncovering wrongdoing, as opposed to the probability.
RGS is a very low threshold. Its incorporation into section 7 of the PCML(TF)A suggests that Parliament intended to cast the net widely, requiring organizations to report more, not less, suspicious transactions. After weighing all the circumstances, if one is still unsure about reporting, it is probably better to be safe, rather than sorry, by reporting.