Handling Law Enforcement Requests for Suspicious or Criminal Accounts

BC

When a financial institution receives a law enforcement request to keep an account open that may be associated with suspicious or criminal activity, there are two steps that it should take:

1. File a suspicious transaction report on the account owner(s): The financial institution should file a suspicious transaction report (STR) on the account owner(s) if it has reason to believe that the account is being used for suspicious or criminal activity. An STR is a report that financial institutions are required to file with the relevant regulatory authorities when they detect a transaction or activity that may be related to money laundering, terrorist financing, or other financial crimes. By filing an STR, the financial institution is fulfilling its regulatory obligation to report suspicious activity to the authorities, and is also protecting itself from potential legal or reputational risks.

2. Ask for a written request from the law enforcement agency that defines the duration: The financial institution should ask the law enforcement agency for a written request that defines the duration of the request to keep the account open. This is important because it helps the financial institution to comply with the request while also protecting itself from potential legal or reputational risks. The written request should specify the reasons for the request, the duration of the request, and any other relevant information. This request can be useful if the financial institution needs to justify its actions to regulators or other stakeholders in the future.

In addition to these two steps, the financial institution should also maintain account records for at least five years after the request expires. This is required by law in many jurisdictions, and helps the financial institution to comply with regulatory requirements and to demonstrate that it has taken appropriate actions in response to the law enforcement request.

It is important to note that the financial institution should not stop filing suspicious transaction reports because law enforcement will be monitoring the account. The financial institution is still required to file STRs if it detects suspicious or criminal activity, regardless of whether or not law enforcement is monitoring the account. Failing to file STRs could result in legal or reputational risks for the financial institution.