How does AML reporting work?

[gnud]

Recently a bank asked me to provide them justification for transactions I made from my personal investment account a company account though the checking account of the bank.

If I prove them that I am the owner of the source account (investment account) and tell them it's a loan to the company without going into details, will they report it, or will they conclude it was a false positive and discard the case?

 

[Martin Everson]

Just tell them the truth and nothing more. Not sure what they would be reporting but you cannot avoid any action taken by bank in this regards.

 

[Sols]

The type of reporting you're thinking of is called SAR (Suspicious Activity Report), sometimes or formerly called STR (Suspicious Transaction Report). Financial institutions are required to file SAR when they — as the name implies — detect a suspicious activity.

Failure to explain the origin of funds can be grounds for suspicion, especially if you can't or don't answer their questions or try to avoid the questions. Different banks have different conditions and control mechanisms to determine risk and suspicion, and different people within the same bank can make different decisions. That makes it impossible to answer with any certainty how a bank would look at your specific case/transaction. It might just be that you tripped a very basic check, such as reaching a certain amount threshold or new recipient/sender. If that's all it is, the check can be quite superficial. If they have identified more risk factors, the investigation can be quite thorough.

Be honest and transparent. You don't have to put all cards on the table right away. It's reasonable to withhold commercially sensitive information. But you need to be prepared to answer follow-up questions.