The Crucial Role of SARs in Combating Financial Crime

The National Crime Agency (NCA) released its latest SARs Reporter Booklet in August 2024, which offers a detailed look into how Suspicious Activity Reports (SARs) are leveraged by law enforcement agencies (LEAs) to tackle serious crime. SARs can include critical information such as phone numbers, addresses, and bank details, and are pivotal in identifying and investigating criminal activities.

How have SARs led to convictions?

The NCA booklet presents various case studies, highlighting how SAR intelligence has been instrumental in uncovering fraud and money laundering schemes. For instance, in one notable fraud investigation, SARs alerted law enforcement to unusual payment transactions involving rapid fund transfers and cash withdrawals, which raised red flags about potential money laundering. This intelligence enabled LEAs to pursue targeted investigations, leading to arrests and further inquiries that are still ongoing. Another significant case involved the submission of a Defence Against Money Laundering (DAML) SAR, which uncovered fraudulent activities linked to social media scams. This led to the freezing of an account holding approximately £20,000, demonstrating the power of SARs in disrupting criminal enterprises.

Another example from the booklet details how a DAML SAR revealed a pattern of suspicious transactions linked to an individual operating an illegal money service bureau. The SAR not only provided the initial tip-off but also helped secure an Asset Freezing Order for over £60,000, ensuring that the illicit funds could not be laundered or dispersed further.

The importance of a good SAR reporting framework

It's easy to overlook the significance of SARs and view them as merely a paperwork burden. However, the ongoing success of these reports in initiating and supporting investigations, showcases why having a robust SAR reporting framework is crucial in helping law enforcement agencies in the fight against serious and organised crime.

Whilst submitting well-crafted SARs can significantly aid law enforcement, potentially serving as a critical piece of a larger investigation, SARs can also be valuable for internal training, offering lessons on how to enhance the financial crime prevention framework of firms. This is crucial as the FCA outlined in its July 2023 Financial Crime in the payments and e-money sector Webinar that “a material number of firms are under-reporting SARs, despite the call to action in our portfolio letter this year”.

Typically, the key elements a firm’s board needs to take into account to ensure their SAR reporting framework is suitably robust are:

• Ensuring systems and procedures are in place for detecting suspicious activity;
• Having full oversight of suspicious activity alert management, including tracking outstanding alerts, ageing analysis, escalation, quality, and alert closure justifications;
• Obtaining and keeping information concerning the Internal and External SAR volumes;
• Having adequate training and reporting procedures for staff on filing an internal SAR; and
• When weaknesses are found, ensuring the production and oversight of a remediation plan that addresses the weaknesses promptly.

Cosegic has assisted a large number of firms with their assessment of internal and external SARs reporting procedures, please don't hesitate to get in touch if you need support.