Documents Required When Reporting an STR

When submitting a Suspicious Transaction Report (STR) to FIU-Nepal, it is important to include the necessary documents that support and explain the suspicious activity.

These documents help FIU better understand the context and background of the transaction. There are two criteria:

If the Suspicious Transaction Involves a Person

• Account Opening Form
• Updated KYC documents (including relationship information)
• Account Statement
• A summary of the suspicious activity
• Any mews articles or other relevant documents

If the Suspicious Transaction Involves a Business Entity

• Account Opening Form
• Businesses Registration Certificate
• Updated KYC documents (including relationship information)
• Account Statement (if Available)
• Information about the holding company, subsidiaries, or group companies
• A summary of the suspicious activity
• Any mews articles or other relevant documents

Indicators of Suspicious Transactions

The guidelines categorize red flag indicators into general and sector-specific types, such as:

• Structuring or smurfing (numerous small transactions just below reporting thresholds)
• Businesses Registration Certificate
• Transactions inconsistent with customer profiles or business nature
• Account Statement (if Available)
• Use of third parties, unexplained wealth growth, frequent large foreign or offshore transfers
• Sudden account activity in dormant accounts, complex or economically irrational transactions
• Suspicious behaviour during onboarding or transaction processes

Sector-Specific Examples:

• Real estate purchases inconsistent with declared income
• Insurance policies purchased in lump sums and cancelled early
• Unexplained wire transfers or remittances
• NGOs/INGOs receiving or disbursing foreign funds without oversight

The guideline emphasizes that the presence of an indicator does not automatically confirm criminal activity but requires scrutiny and, if suspicion remains, prompt filing of an STR.

Reporting Guidance for STR

To ensure effective monitoring and control of suspicious financial activities, all Reporting Entities (REs) are required to follow specific procedures when submitting Suspicious Transaction Reports (STRs) or Suspicious Activity Reports (SARs) to FIU-Nepal.

Here is the way:

• Some reporting entities, like banks, financial institutions (BFIs), insurance companies, securities brokers, and selected others, must submit STRs/SARs electronically through the goAML web reporting system.
• Reporting through using the goAML software, and here are the procedures:
  • goAML Operational Guideline for Res
  • standard XML Reporting Instructions and Specifications
  • goAML Web Reporting Guideline issued by FIU-Nepal
• Before reporting, entities should understand the reason and background of the transaction and provide all available and necessary details in the goAML system.
• Suspicious transaction reports must be sent to FIU-Nepal via the Compliance Officer, following clear internal procedures that all employees must adhere to.
• STRs/SARs should be reported as soon as possible, but no later than three working days after confirming there are valid grounds to suspect that the transaction is linked to money laundering or terrorist financing.
• If new facts come to light, either confirming or disproving the original suspicion, the reporting entity must update FIU-Nepal accordingly.

Conclusion

The synergy between Nepal’s Money Laundering Prevention Act 2064 and FIU-Nepal’s STR Guidelines ensures a robust apparatus for identifying and reporting suspicious transactions. Mandatory reporting, expansive red flag indicators, strict timelines, and confidentiality obligations are key instruments in Nepal’s fight against financial crime, terrorism financing, and abuse of the economic system.