On Sunday, media organizations around the world published a series of stories with revelations from more than 2,000 suspicious activity reports (SARs) leaked to BuzzFeed in 2019. The leaks themselves constitute a criminal offense and a major breach of security at the U.S. Department of the Treasury. They arguably undermine the trust between regulated firms, major international banks, and the Financial Crimes Enforcement Network (FinCEN).
Consequently, the leaks and the subsequent reporting has divided opinions within the community of financial crime compliance officers. For the record, I was aware of the leaks several months ago, and I have been assisting the International Consortium of Investigative Journalists, BuzzFeed, and BBC Panorama. I have seen many of the SARs, and I provided commentary, context, and analysis. When I first saw the SARs, presented upon the screen of a journalist’s laptop, I immediately recognized the FinCEN database had been compromised and this was a very serious matter.
I am aware of a number of differences between the U.S. and U.K. SAR regimes, in particular the far stricter secrecy and protection of SARs in the United States, where they are used for intelligence purposes, by law enforcement agencies, and by regulators. In the United Kingdom, they are at times used to create a defense for firms that may suspect a transaction initiated by a customer ultimately constitutes the laundering of the proceeds of crime. In addition, law enforcement agencies can use SARs in an evidential capacity, and ultimately they may end up in the hands of the customers when a firm discloses the existence of a SAR within civil litigation proceedings.
I did weigh what I perceived to be the conflicting interests here, including the crime committed and damage to the trust between FinCEN and reporting entities, but I was struck by how many of the SARs were filed pursuant to prior media articles or regulators raising concerns. What swayed me was failure—almost total failure of the entire AML regime. Like many of you, this of itself was nothing new to me, but the SARs presented this in a way I had not previously seen, particularly in terms of scale and volume, intertwined with political conflicts and names, addresses, and practices I had seen far too many times before.
It struck me, then, that these leaks could make a difference. As with the prior Panama, Swiss, and Paradise leaks, they inform the public, increase awareness, and at the same time reduce tolerance of these woeful system failings.