Writing an Effective Suspicious Activity Report (SAR)

A Suspicious Activity Report (SAR) is a critical tool for detecting and preventing financial crimes. In this article, we will provide a comprehensive guide on how to write a SAR that is effective in identifying and mitigating illicit activities.

What is an STR?

An STR is a report filed by a financial institution with a Financial Intelligence Unit (FIU) when it suspects that a transaction or activity may be related to money laundering, terrorist financing, or other illicit activities. The purpose of an STR is to provide valuable information to law enforcement and regulatory agencies to help prevent and investigate financial crimes.

Key Elements of an STR

A well-crafted SAR should include the following key elements:

Narrative

A clear and concise description of the suspicious activity. This section should provide a detailed explanation of the transaction or activity that raised suspicions, including any relevant context or background information.

Identity Information

Information about the client or account holder involved in the suspicious activity. This may include their name, address, date of birth, and other identifying details.

Reasons for Suspicion

An explanation of why the financial institution believes the activity is suspicious. This section should clearly articulate the rationale behind the suspicion, including any relevant indicators or red flags that were identified.

Do’s and Don’ts

When writing a SAR, it’s essential to keep in mind the following do’s and don’ts:

Do:

• Keep it simple: Use an active tense and avoid technical jargon.
• Quotes: Use quotes sparingly and only if they add to the narrative.
• Confidentiality: Keep reports confidential and only share with authorized personnel.
• Connections: Identify any connections between clients or accounts involved in suspicious activity.
• Copies: Keep a copy of the report for future reference.

Don’t:

• Keep it short: Aim for one page or less, unless strictly necessary.
• Repetitions: Avoid repeating information that is already stated in the report.
• Bullet points: Use bullet points sparingly and only to list specific transactions or information.
• Shopping lists: Avoid lengthy lists of transactions; instead, highlight key transactions and summarize others.

Quality vs Quantity

Financial Intelligence Units (FIUs) receive a large volume of STRs, making it essential to focus on quality over quantity. Aim for accurate and thorough investigations before drafting an STR, and avoid excessive reporting that can lead to “crying wolf” and decrease the value of STRs.

By following these guidelines, financial institutions can improve the effectiveness of their SARs and help prevent financial crimes.