A Suspicious Activity Report (SAR) is a documentation submitted by relevant institutions to monitor and report suspicious activities to regulatory bodies. When there are suspicions of money laundering or fraud, financial institutions and their affiliates are required to report such activities to the authorities. The specific regulatory body overseeing SAR reports varies based on the location; in the UK, it is the UK Financial Intelligence Unit, operating on behalf of the National Crime Agency (NCA), responsible for handling SAR reports.
These SARs are mandated under the Bank Secrecy Act (BSA) of 1970. They serve to alert law enforcement agencies about potential cases of money laundering or terrorist financing, making them a vital source of intelligence not only for economic crime but also for other criminal activities. The ultimate purpose of SAR is to detect and identify illegal activities such as money laundering, terrorist financing, tax evasion, and other forms of financial fraud.
What Can Be Considered a Suspicious Activity?
Suspicious activities are characterized by specific monetary values, commonly referred to as currency thresholds. In the United States, these thresholds for national US banks and international banks operating under the Office of the Comptroller of the Currency (OCC) jurisdiction are set by the Financial Crimes Enforcement Network (FinCEN). Although these definitions are tailored to US banks, they provide a general understanding of the types of activities that qualify as suspicious.
As per the OCC’s guidelines, a Suspicious Activity Report (SAR) must be submitted to FinCEN under certain circumstances, including:
1. When there is suspicion of insider trading abuse.
2. If a violation involving $5,000 or more is identified.
3. If a violation involving $25,000 or more is detected, irrespective of the suspect’s identity.
Additionally, transactions that contravene the Bank Secrecy Act (BSA) or are intended to evade existing regulations should also trigger the filing of a SAR. It is important to note that reasonable suspicion is based on the belief that relevant evidence exists, and merely having a “vague feeling of unease” would not be sufficient grounds for filing a SAR.
Suspicious Activity Reporting Process
Suspicious Activity Reports (SARs) are a tool provided by the Bank Secrecy Act (BSA) of 1970. SARs enable governments to identify and analyze trends and patterns in a wide range of personal and organized crime. With this information, they can proactively anticipate and combat fraudulent and criminal behavior. Although most SARs originate from the financial sector, other institutions such as law enforcement, public safety workers, and business owners also submit SARs. Federal law requires that financial institutions, along with their managers, officers, employees, and agents, report suspicious or known criminal violations, as well as any suspicious activities, without notifying any individuals involved in the reported transaction.
To submit a SAR file, the following information sections are required:
1. Details such as names, passport numbers, birth dates, addresses, social security numbers, and phone numbers of all parties related to the suspicious event are collected.
2. Dates of the suspicious events that occurred, along with documentation of suspicious activity codes, are essential.
3. Contact information for the financial institution and the institution where the suspicious event took place must be provided.
4. A written description of the suspicious event is developed.
According to the National Crime Agency (NCA), every suspicious activity must be immediately reported in regulated sector companies under Part 7 of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000. However, even companies in different sectors must also raise a SAR if they detect any abnormality suggestive of money laundering or any kind of financial crime.
