What is a Suspicious Activity Report?

Wondering, ‘What is a SAR’? A SAR, or Suspicious Activity Report, is a way of informing financial authorities of any suspicions you might have about the behaviour of a client or customer. Specifically, behaviour which signals potential involvement in money laundering or terrorist financing activity.

In the UK, SARs are regulated by the UKFIU (or UK Financial Intelligence Unit). They can be submitted via the SAR Online System which is hosted by the National Crime Agency. Every year, the UKFIU then releases an overview SARs report, to summarise the findings of the year’s total SARs, and analyse key themes and trends in financial crime reporting.

When is a SAR required? 

Simply put, a SAR is required whenever an individual working for a business that’s subject to money laundering regulations sees suspicious activity.

So, what constitutes suspicious activity?

Suspicious activity doesn’t have a universal appearance, and might look different in every organisation or business. Employees in financial services institutions are trained to recognise such activity, with their initial red flag being sent up the chain of command for further investigation. You’ll need to submit a SAR if you encounter any of these red flags while working in the regulated sector: 

• Deposits of an exceptionally high value.

• Unusual transactions which are out of the ordinary in origin, destination or value.

• Wiring money overseas, particularly large amounts of cash.

• Unusual behaviour that show signs of fraud, such as showing a reluctance to provide necessary information.

• Customer or client behaviour that breaks a consistent pattern.

• Transactions that don’t make any commercial sense.

• Unusually large cash withdrawals.

Who can raise a SAR?

According to the National Crime Agency, anyone working in the regulated sector is required by the Proceeds of Crime Act to submit a SAR after witnessing suspicious behaviour. However, even if you’re not working for a company in this sector, you can still submit a SAR as a private individual, if you have knowledge of – or suspect – a money laundering offence.

If you notice any behaviour which meets the descriptions above, you should raise your concerns with your firm’s Money Laundering Reporting Officer. It’s then up to the MLRO to decide whether or not your suspicions warrant a SAR filing, once suspicious activity is detected, financial institutions have 30 days to submit a SAR, or 60 days if further evidence is required to supplement the report. 

Why is raising a SAR important?

In the UK, there are over 460,000 SARs submitted every year, and collectively these reports contribute a great deal of information to the efforts of financial authorities to tackle money laundering and terrorist financing. SARs provide valuable insight into criminal methods, and can help to identify changing financial crime tactics; information filed in a SAR could enable an existing investigation to be taken further, or even lead to completely new investigations being opened by the Financial Action Task Force (FATF).

As well as doing your part to help with the global battle against financial crime, every financial institution is legally obliged to report suspicious activity via a SAR, in line with the POCA 2002, the latest EU Money Laundering Directives and the 2017 Money Laundering Regulations. As well as banks, this also includes other firms in the regulated sector, like solicitors, estate agents, accountants and many others.

How to raise a SAR

If your firm has a nominated Money Laundering Reporting Officer (MLRO), it’s best practice to express your concerns to them directly, so they can raise a SAR to flag the relevant information. However, you can file a SAR yourself, and there are several mechanisms to do this.

Use the SAR Online System. This is a simple enough process – submit your SAR via the NCA portal, and you’ll receive instant confirmation that your report has been received. There’s no paperwork involved with this option; every step is carried out online.

Report a SAR manually. If you choose to file your SAR manually, you’ll need to download and print several different forms, fill them out by hand and return them to the NCA via post or fax. Please note – you won’t receive any acknowledgement of your SAR if you submit it this way.

Example of a SAR

When you submit a SAR, providing the right information about the case can make all the difference. You’ll need to summarise the suspicious activity, explain how it was detected, and give a few details to identify the business or individual too.

Here’s a more comprehensive breakdown of the information you should cover in a Suspicious Activity Report:

• All the information gathered during customer due diligence or KYC, including full name and date of birth.

• A detailed account of your reasons for suspicion, in approximately 1500 words. You need to divulge who is involved, what their role is, where and when the activity is taking place, how the activity came to be, and why you’re suspicious of it.

• When you’re explaining the circumstances that led you to submit a SAR, put the events in clear chronological order.

• Don’t use acronyms or any specific industry jargon, which could cause confusion.

• Disclose any bank account or transaction numbers that could assist the investigation clearly, and in standard format.

You can find more advice on submitting a SAR in the NCA’s formal guide, or see some clear example scenarios in this guidance from the US Financial Crimes Enforcement Network (FinCEN).

Submitting an effective SAR

Preventing illegal financial activity relies on submitting effective Suspicious Activity Reports, with the information you provide to the National Crime Agency directly helping their investigations. Clairity is essential when creating an effective SAR, with the more details you can give about the subject in question, the better. As well as full names, dates of birth and addresses, any extra information you could provide regarding car registration or passport details for example, would be vital information for law enforcement.

A SAR doesn’t have to be an exhaustive, technical account. Avoid over-explaining or using unnecessary jargon when outlining the suspicious activity that made you create the report in the first place. The clearer you are about who the potential perpetrator is, what illegal activity they may be involved in and when the suspicious transactions were carried out, the more effective the NCA’s investigation will be.

Once your SAR has been raised 

Once the report is in the hands of financial investigators, the suspicious transactions and activity can be processed and duly checked to determine the legitimacy and severity. Law enforcement will be contacted if a thorough investigation is necessary. During this entire process, it’s crucial that those who file the report don’t make it clear to the account holder that a SAR has been filed against them, with this illegal act being known as ‘tipping off’. 

Throughout the investigation process, the only parties aware of the report should be those who filed it and the financial investigators, in addition, SAR investigations must be kept for five years following the date it was filed. Failure to comply with these legal requirements having the potential to result in large fines and even imprisonment. 

How SmartSearch help with a suspicious activity report

SARs form a crucial part of the detection and investigation of financial crime in the UK and the world over, but ensuring your firm is AML compliant is the best way to eliminate suspicious activity altogether.

SmartSearch offers a comprehensive selection of intelligent AML and compliance services, including everything from KYC checks to adverse media screenings, right through to ongoing monitoring. Our fully integrated app enables you to access these facilities while you’re on the move, providing you with a clear result for your potential client or customer in a matter of seconds. Find out more about the SmartSearch platform over on our product overview page. 

Contact us now for expert guidance through the process, instantly and effortlessly making your company AML compliant.