What could you be doing to file more effective suspicious activity reports (SARs)?


The International Compliance Association (ICA) is a professional membership and awarding body. ICA is the leading global provider of professional, certificated qualifications in anti-money laundering; governance, risk, and compliance; and financial crime prevention. ICA members are recognized globally for their commitment to best compliance practice and an enhanced professional reputation. To find out more, visit the ICA website.

That was the focus of a recent International Compliance Association roundtable for compliance officers in Asia Pacific. Hosted in partnership with Galvanize, the discussion was led by Martin Woods, chair of advisory board for the Global Compliance Institute, whose expertise left delegates with plenty of guidance and advice on everything SARs.

“There is a constant misunderstanding of SARs, and it’s a very difficult job filing them. You are asked to do immense things with limited information, so you have my sympathy,” Woods told attendees.

Delegates agreed there are too many SARs in the system and stressed the solution is adopting a holistic approach covering every angle before filing to gain as accurate a picture as possible.

A poll then sought to discover the anxieties and concerns of the participants. Asked what they thought presented the greatest pressure to an anti-money laundering (AML) analyst, most opted for a lack of data, which came out on top ahead of volume of alerts, fear of getting it wrong, and protests from customers and relationship managers.

What followed were solutions to these problems, resulting in five key tips to help with filing SARs.

Wear the AML badge with pride

To mitigate anxieties, it was agreed it is vital those working in AML have pride in their profession and use it as a form of sustenance.

“The key thing about AML is that it’s about protection,” said Woods. “We can stop money laundering and save lives. But if we get it wrong, we can damage relationships.”

To illustrate this point, a discussion was struck up regarding the famous case of Shah v HSBC. Training was the reason the case failed—the nominated officer hadn’t done enough, demonstrating a lack of training can have a significant impact.

Think like a detective

An AML detective should be asking inquisitive questions and work to a structured investigative process. At the beginning, conversations with a customer should not be adversarial; the consensus among delegates was it is essential to gather information to help the firm come to the right decision.

The importance of staying calm and in control was underlined, as well as talking to the relationship manager, who will know the customer better than anyone. It must be remembered most customers are not money launderers, though some will be.

A failure to talk to customers means it will be difficult to progress beyond the starting point of not having enough data to make an accurate decision.

Don’t fear tipping off

Delegates sought to ease each other’s concerns over tipping off, pointing out that, though it is a crime, it requires two components: the actual act and the intent to tip off.

Merely requesting information is not tipping off, so those in AML shouldn’t be scared to talk to customers, the vast majority of whom are legitimate. Customers must be given the chance to explain themselves.

But when you do talk to them, you should do so with an AML detective mindset.

It was acknowledged this can be intimidating, as the situation can be confrontational and because your customer might actually be a money launderer. Nevertheless, the importance of staying calm was repeatedly underlined.

“Remember you are doing the right thing and to follow your own processes,” Woods advised. “Some people are filing SARs because of fear—because it’s easier to file a SAR than not.”

This motivation, it was agreed, is exactly what can get firms into trouble.

Have a policy and stick to it

As compliance officers, delegates stated they tend not to talk to clients for fear of scaring them off and harming customer relationships.

The remedy, delegates said, was to have a policy—to inform customers it is company policy not to talk about money laundering.

It is vital compliance officers remember AML is their business and language and they can pick up on things a relationship manager wouldn’t.

A hypothetical situation followed: Would you tell a customer you are questioning that you are making a routine call? Woods stressed you shouldn’t.

“None of these laws make you lie, but they might make you feel uncomfortable,” he said. ‘We have been riddled with this fear factor, but we are seeking risk information.”

Viewed in this light, the task of attaining information is less intimidating.

Risks change—and so should we

The roundtable drew to close by discussing the threat posed by fraud and the challenges faced by those in compliance.

Delegates agreed filing a SAR is not always enough. If it’s fraud, there will be a third party, as well as relationship managers, owning the risk.

The easy way out is to forge ahead and allow the transaction. But delegates recognized this is a false security.

“SARs define you and your AML program. But don’t be intimidated: be knowledgeable and confident and keep filing,” Woods said. “That way, we can move beyond reporting and intelligence gathering to stopping money laundering and saving lives.”

Lots of people will read a SAR’s narrative, so it is important that it is accurate. Following this advice, as well as the other takeaways, will help those in AML produce better quality SARs while feeling more confident in their role.

The International Compliance Association is a sister company to Compliance Week. Both organizations are under the umbrella of Wilmington plc.