STRs: What 'Reasonable Grounds to Suspect' Means

The Suspicious Transaction Report obligation sits in section 7 of the PCMLTFA: every reporting entity must report to FINTRAC every financial transaction that occurs — or is attempted — in the course of its activities where there are reasonable grounds to suspect the transaction is related to the commission, or attempted commission, of a money laundering offence, a terrorist activity financing offence, or a sanctions evasion offence. The two features founders find most surprising are in the statutory text itself: attempted transactions are expressly covered, and the trigger is a judgment about grounds, not a dollar event.

That makes the STR structurally different from Canada's threshold reports. The large cash transaction report fires on receiving $10,000 or more in cash; the large virtual currency and international electronic funds transfer reports have their own $10,000 triggers. FINTRAC's guidance confirms the STR has no monetary threshold at all — a small transaction can be reportable and a large one not. Suspicion, not size, is the trigger, which is why the STR is the report that depends most on the quality of your monitoring and escalation process.

The Act asks for grounds to suspect — not grounds to believe, and not proof. You are not deciding whether an offence occurred; you are deciding whether the facts in front of you — what you know about the client, the transaction, and its context — reasonably support a suspicion that the transaction is related to one. FINTRAC's guidance on reporting suspicious transactions sets out how it frames the threshold and the indicators it expects businesses to weigh; check the current FINTRAC guidance rather than relying on a paraphrase, because the framing matters in an examination.

Operationally, most businesses run this as a two-stage process. Front-line rules or staff raise a flag that something is unusual; a designated reviewer then assembles what the business already holds — identification records, transaction history, prior flags, the stated purpose of the relationship — and decides whether the assembled facts establish reasonable grounds to suspect. Both outcomes get documented: a filed STR, or a dated record of why the flag did not rise to suspicion. The unfiled decisions are what demonstrate the threshold is being applied rather than ignored.

The words 'or is attempted' are in section 7 itself, so a transaction that never completes can still require an STR. The classic pattern: a walk-in customer at a money services business starts a transfer, is asked for identification, becomes evasive about the source of funds, and abandons the transaction. No money moved — but the conduct observed during the attempt may itself supply reasonable grounds to suspect.

Two operational consequences follow. Front-line staff need a way to capture what was attempted — amounts discussed, names given, what was said, why it stopped — because those observations become the substance of the report. And declining a transaction does not close the file: refusing to proceed and assessing whether to report are separate steps, and the second one still has to happen.

The deadline is not in the Act. It sits in the Suspicious Transaction Reporting Regulations (SOR/2001-317, s. 9(2)): the STR must be sent as soon as practicable after the business has taken measures that enable it to establish that there are reasonable grounds to suspect. Unlike the large cash transaction report's 15-day deadline or the five-working-day deadlines for large virtual currency and international electronic funds transfer reports, there is no fixed number of days.

That is not a licence to sit on a flag. The clock runs from your own review measures, so an unexplained gap between the alert and the assessment is the hardest thing to defend. Date-stamp the sequence — flag raised, review started, grounds established or not, report submitted — and keep the review tight. The report's required contents are prescribed in Schedule 1 to the same regulations.

Since August 19, 2024, suspected sanctions evasion is a third ground for the STR, added to the Act by the 2024 Bill C-59 amendments and confirmed in FINTRAC's special bulletin on sanctions evasion. There is no separate report form: suspected sanctions evasion is reported through the STR, and if a transaction raises both money laundering or terrorist financing and sanctions evasion concerns, one STR covering each suspected offence is filed.

On confidentiality, PCMLTFA section 8 prohibits disclosing that a report has been, is being or will be made — or disclosing its contents — with the intent to prejudice a criminal investigation, whether or not one has begun. Note the qualifier: the prohibition is conditioned on that intent; it is not an unconditional tipping-off ban. In practice, most businesses simply never discuss filings with clients, which keeps them well clear of the line.

Finally, terminology. Canada's report is the Suspicious Transaction Report, filed with FINTRAC. 'Suspicious activity report' (SAR) is the equivalent term used in the United States and some other jurisdictions. If your policy template was drafted for a US audience and speaks of SARs, the Canadian obligation it maps to is the STR — carrying the Canadian specifics described above: attempted transactions expressly covered, no monetary threshold, and sanctions evasion as a reporting ground.