SAR is a commonly used acronym in Anti-Money Laundering (AML) regulation; it stands for Suspicious Activity Report and refers to a document that is used to raise an alert about activity suspected to be linked to money laundering or other underlying types of crime. These underlying crimes, which produce the assets that criminals seek to launder, are known as predicate crimes. SARs are closely related to suspicious transaction reports (STRs), which perform much the same function, but are more closely related to specific transactions.
Different jurisdictions may include only one of the SAR/STR in their AML frameworks, while others include both types of report.
While different jurisdictions have different laws around suspicious activity reporting, international standards of AML legislation impose a general obligation on anyone to alert the authorities if they have suspicions that money laundering and/or related crimes are taking place. In practice, this mainly applies to financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs), given that these types of business tend to be the main targets of money launderers.
For designated businesses, their main AML reporting obligation is to submit SARs to the relevant authorities: the national Financial Intelligence Unit (FIU), and, usually, the supervisory authority for their business sector. The role of FIUs is to collate, sort, analyze and distribute information on potential illicit finance activity to national law enforcement bodies and other FIUs around the world. After being submitted to a national FIU, SARs are transformed into intelligence resources that are used to launch investigations, conduct prosecutions, and ultimately catch and sanction criminals.
A SAR should aim to clearly describe the suspicious activity that has taken place, identify the individuals and/or corporate entities involved, explain the reasons for suspicion, and provide evidence and data for this that can be used by investigating authorities to develop a case. Technological tools, such as Themis Search’s risk mapping function, can play a vital role in improving the quality of SARs. It is also vital that those submitting reports have an up-to-date and detailed understanding of money laundering typologies; this is essential when businesses attempt to share their grounds for suspicion with authorities.
Finally, while the submission of SARs is a serious legal requirement for many businesses, with serious penalties attached to any failure to fulfil this obligation correctly, these reports must be looked at not as a time-consuming demand on businesses’ resources, but rather as an opportunity for firms to make an invaluable contribution to the fight against financial crime.
Each SAR, although it may seem individually insignificant, contributes to the bank of information being accumulated by the FIU. This information serves not only as vital evidence in individual criminal cases, but also as a dataset from which new trends in the ever-evolving threats of illicit finance can be identified.
Ultimately, then, a SAR is a vital way for businesses to make a powerful positive impact in the fight against financial crime. Themis provides a range of tools, research and training that can help businesses to make even more of a difference, by improving the ease and effectiveness of their SAR submissions – please contact X (insert email address?) if these are of interest to you.
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