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Simple English definitions for legal terms
suspicious-transaction report
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A quick definition of suspicious-transaction report:
Term: Suspicious-Transaction Report
Definition: A form that banks and other financial institutions used to have to fill out if they noticed a transaction that seemed suspicious. This could mean that someone was trying to hide money or avoid paying taxes. The form was replaced by a newer form called the Suspicious-Activity Report.
Abbreviation: STR
A more thorough explanation:
A suspicious-transaction report is a form that banks and other financial institutions use to report transactions that may be related to a violation of the Bank Secrecy Act or its regulations. It may also suggest money-laundering or tax evasion.
Formerly known as IRS Form 4789, this report includes a checkbox that financial institutions can use to indicate that a transaction is suspicious. However, this checkbox has been replaced by the suspicious-activity report.
Suppose a customer comes into a bank and tries to deposit a large sum of money in cash without providing any explanation for where the money came from. The bank may file a suspicious-transaction report to alert authorities to the possibility of money-laundering or other illegal activity.
Another example could be a customer who frequently deposits large sums of money into their account from different sources, but never withdraws any money. This could be a sign of money-laundering, and the bank may file a suspicious-transaction report.
These examples illustrate how a suspicious-transaction report can help financial institutions identify potentially illegal activity and report it to the appropriate authorities.