Suspicious Activity Report
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Money laundering is the term used to describe the use by criminals of the financial system to hide the source of their funds gained from illegal activity such as drug trafficking, bribery, extortion, embezzlement, theft or other criminal activity, as the criminals try to “wash” their ill gotten gains through a series of transactions to hide the source and make the end result appear genuine.
Anti Money Laundering is the term used by banks and other financial institutions to describe the variety of measures they have to combat this illegal activity and to prevent criminals from using individual banks and the financial system in general as the conduit for their Proceeds of Crime. In all major jurisdictions around the world, criminal legislation and regulation make it mandatory for banks and financial institutions to have arrangements to combat Money Laundering, with harsh criminal penalties for non-compliance.
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A Suspicious Activity Report (known as a SAR) is a key element of those mandatory arrangements in a financial institution. Suspicious Activity Reports help banks and financial institutions protect themselves and their reputation from the criminals and help law enforcement to track down and arrest those criminals.
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There is probably nothing which can damage the reputation of a financial institution more nor leave it exposed to serious regulatory sanction and fines than the suggestion that it has been used as a conduit to provide funds which have been used to finance Money Laundering or, even worse, has turned a blind eye to suspicious activity.
If an employee has concerns when carrying out background identification and "Know Your Customer" checks on a new customer that their funds may be derived from criminal activity and be the Proceeds of Crime, that person is obliged by law to report their suspicions to an independent Financial Intelligence Unit (FIU), which is often run by the government or police authorities.
Similarly, when a financial institution is processing a transaction for a customer and has concerns that the funds may be derived from crime or that the beneficiary is linked to crime, the firm is obliged to submit a SAR to the FIU. In larger financial institutions, particularly those with a large Retail customer base, automatic systems are used to monitor account activity and to issue an "alert" to an operator when activity is different from that expected or historic activity.
The information which must be reported in the SAR is basically anything which would help the FIU to further its investigations and also, importantly, link the SAR to other SARs and other investigations if they can. Therefore, what is often reported includes name of the customer, bank branch and account details, the transaction itself (and others where relevant) and the beneficiary. A firm will often have ongoing dialogue with the FIU as the investigation continues and more information is requested.
It is important to note that an employee does not have to identify what sort of crime they think may be taking place or the source of the funds – drug trafficking, extortion, bribery etc. Doing the detective work in this area is very much the role of the FIU, who will involve the Police or other law enforcement authorities as they see fit. An employee does not have to be a detective or know the intricacies of crimes. However, their employer is obliged by law to ensure that they have adequate training on the basics of Money Laundering, the legal and regulatory requirements and what are the obligations on them as an employee.
suspiciousactivityreport.com gives you access to a wide range of advice, systems and materials which not only ensure that your Suspicious Activity Report processes are robust, compliant and efficient but also help you to develop a robust Anti Money Laundering and Counter Terrorist Financing framework in your business and a culture of crime prevention across the organisation. In particular, suspiciousactivityreport.com gives you access to comprehensive lists to enable you to screen potential customers in order to exclude known criminals, including terrorists, and identify any high profile individuals (such as Politically Exposed Persons) among the customers you do take on. You will then be able to comply with stringent legal and regulatory requirements, keep the criminals away from your doors and protect your reputation.
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