As a financial organization, you have a responsibility to identify suspicious behavior. You need to do your part in preventing financial crimes from taking place. Even though financial crimes may not be looked at in the same manner as violent crimes, financial crimes can be just as serious. Whether this involves straightforward money laundering or the financing of international terrorist organizations, suspicious activity reports are going to play a role in reporting unusual financial transactions to the relevant authorities. What is a suspicious activity report and what do you need to know? It is important for you to remain compliant with relevant regulations.
What Is Included in a Suspicious Activity Report?
A suspicious activity report, usually shortened to SAR, is a report that is sent to financial authorities. You will send this report to financial authorities to make them aware of a transaction that appears to be out of the ordinary. For example, this is a transaction that could be a precursor to a crime. Or, it could be a transaction that threatens the safety of the public. In some situations, the suspicious transaction could simply be a coincidence. If that is the case, then it is the responsibility of the financial authority to investigate that transaction and clear it. On the other hand, it is always better to be too diligent to allow illegal transactions to go undetected. In some situations, these illegal activities could finance terrorism, be evidence of money laundering, or be used to commit financial fraud.
Because compliance with suspicious activity reporting requirements is so important, it is critical for you to stay up-to-date on when you need to file this report, what you should include, and what is done with these reports. Furthermore, these reports are also important because they allow government organizations to analyze trends in the world a financial criminal activity. These friends are important in influencing legislation, policy, and countermanding activities to prevent these illegal transactions from taking place in the future.
When Do You Need To File an SAR?
So, when exactly do you need to file an SAR with the authorities? If you notice that a transaction is out of place from one of your clients, it is something that has to be reported. Of note, you do have some time to investigate this transaction on your own. For example, you may want to reach out to your client for clarification. After you detect this transaction, you have 30 days to confirm this transaction and submit a report. If you need an extension, you can ask for one. If you ask for an extension, you still have to file a report within 60 days of the original transaction.
There are several situations where you need to file an SAR. The most common examples include:
- If a transaction is over a certain value, you always need to file a report no matter what. This is important not only for looking for evidence of a financial crime but also for tax purposes.
- There are different thresholds for any transaction that takes place across international borders. If there is an international transaction taking place, make sure you stay up-to-date on the reporting requirements.
- If you have regular clients, you get to know their financial patterns. If you noticed that something is out of place, you need to report it.
As an example, if one of your clients has his or her paychecks coming into your financial organization, you understand these are probably going to be the same every few weeks. If the size of the check suddenly changes, or if the client suddenly starts to withdraw large amounts of money, that is a suspicious pattern. You should reach out to that client and confirm why this financial activity is taking place.
In other situations, you may suspect that someone is engaging in a practice called structuring. This is a practice of depositing or withdrawing specific amounts of money for the explicit purpose of evading reporting requirements. This is also something that you should report via SAR.
Finally, you should also file an SAR if one of your employees is engaging in suspicious behavior. If your computer system is compromised, this is also something that you should report.
Who Is Responsible for Reporting Suspicious Activity?
A lot of financial organizations have an automated system in place that is responsible for detecting activity that is outside of the ordinary. On the other hand, it still falls to human hands to investigate everything that is flagged by the reporting system and report it appropriately. You should probably have individuals who are specifically trained to investigate flagged transactions, document them, and file the SAR with the correct authorities.
Furthermore, understand that SARs are reviewed by attorneys, Financial investigators, and management personnel. In addition, anyone who files an SAR received immunity for any statements that are made during the process. Therefore, SARs are usually confidential. Most individuals are forbidden from discussing an SAR with all third parties, including media organizations.
If you have questions or concerns about how your organization is handling SARs, reach out to trained professionals today. That is where we can help you. We are Truth Technologies, and it is our job to help you to detect financial crimes. With our assistance, you can reduce your regulatory liability. Contact us today to learn more about how we can help you!