Regulated financial services firms are required to submit a Suspicious Activity Report (SAR) in respect of information that comes to them in the course of their business. They must do so if they know, suspect, or have reasonable grounds for knowing or suspecting that a person is engaged in, or attempting, money laundering or terrorist financing.
Tools like 123signed make it much easier for financial firms to identify suspicious transactions and collate the relevant information to submit a comprehensive report.
The UK Financial Intelligence Unit (UKFIU) receives more than 460,000 SARs a year. It analyses the SARs to extract strategic and tactical intelligence, identify the most sensitive SARs and send them to the appropriate organisations for investigation. Once submitted, a single SAR is often used multiple times by different organisations for different investigative and enforcement purposes.
Good quality SARs can reduce delays and help the UKFIU to quickly prioritise and process the report. Poor quality reporting can lead to unnecessary delays, particularly where a defence against money laundering has been sought, and can cause problems with your client, customer or supplier. So how do firms submit good quality reports?
Complete as many fields as possible
The UKFIU regularly stresses the importance of providing as much information as you can and in the correct fields, not forgetting relevant contact details. As well as investigating the suspicion, victims may be contacted to provide advice and support so additional contact details of relevant parties can prevent additional requests from agencies.
Dates of birth are also a vital field for identifying individuals correctly. To help further with identification, SARs should contain all available Customer Due Diligence (CDD) information.
Where you don’t have the information for a field, enter the word ‘Unknown’ to make it clear that the omission is not an error.
Do not put reporting officers’ details in a SAR. This is really important to remember.
It is also important for SAR processing, that information is provided in the correct field, rather than just putting it all in the Reason for Suspicion field. Providing information in the wrong place on the form will cause delays and make it more difficult for the relevant authorities to properly process the SAR. This can cause particular problems if you are requesting a defence against money laundering.
Reason for Suspicion field
Start this field with a brief and concise summary of your suspicion. This will help it to be quickly triaged.
You then need to go on to provide more information in respect of the detail. This needs to be provided in a way that’s easy to scan read, so:
- Use short sentences and paragraphs
- Remember to use the proper punctuation
- Structure your report in a logical format and provide a chronological sequence of events
- Include all relevant information
- Don’t write the SAR in capital letters as this makes it very difficult to read
- Separate bank account/transaction information
- Use the standard sort code and account format as 012345 12345678.
Remember that the people reviewing the forms have a range of different backgrounds and experience, so avoid using acronyms, technical terms and jargon and don’t assume everyone reading the form will have a detailed knowledge of your sector. If you’re describing a service provided or technical aspect of your work, providing a brief explanation will help the reader and therefore help reduce delays.
What information should be included?
When completing the Reason for Suspicion field, it can also be helpful to make sure you’ve answered the following:
- Who is involved?
- How are they involved? / How did the circumstances arise?
- What is the criminal/terrorist property? / What is the value of the criminal/terrorist property (estimated as necessary)?
- Where is the criminal/terrorist property? (e.g. a casino in London, a property in Hampshire etc.)
- When did the circumstances arise? Or when are the circumstances planned to happen?
- Why you are suspicious or have knowledge.
Links to a Previous SAR
If the reported subject (e.g. client/customer) has been the subject of a previous SAR submitted by your organisation, you should:
- Include up to three previous SAR reference numbers provided to you by the UKFIU.
- Don’t provide more than 3 previous reference numbers.
- Don’t include any of your firm’s internal reference numbers.
SARs are only for reporting suspicious activity to the National Crime Agency (NCA). The UKFIU cannot advise firms on the approach or actions they should take to mitigate particular risks or to advise that property is/isn’t the proceeds of crime or terrorist financing.
If you need advice on risk and mitigations in respect of anti-money laundering (AML), counter-terrorist financing (CTF), or any other regulatory issue, our partner firm, Neopay Ltd can help. Neopay can help you review and update your compliance program regularly. Neopay’s team of experts stays up-to-date with the latest regulatory developments and can provide guidance on any changes that may impact your business.
Further Information on Suspicious Activity Reports
The UKFIU have a lot of information and guidance on their website, which can be found here.
This includes guidance on using their online SAR portal and guidance on what should be included in each of the report fields.
It has also published guidance on submitting better quality SARs which can be found here.
How 123signed can help
Our 123signed technology takes a multi-layered approach to financial crime compliance, ensuring your regulatory AML and monitoring requirements are covered in a quick and easy process. Incorporating KYC and KYB processes, and an efficient transaction monitoring system, 123signed allows you to identify fraudulent activity during the onboarding process in real-time. As an automated tool which aggregates multiple solutions, 123signed provides everything you need in one cost effective application. Contact us today to find out more.