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SARs

 

 

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A suspicious activity report (SAR) is the format by which suspicions of money laundering are reported. This allows information and intelligence to be formally passed to law enforcement agencies - helping them prevent, detect, investigate and prosecute crime.

Response Letters from FIU **UPDATE**

The FIU is currently conducting a review of all processes and procedures as part of a recent Lean Project.

As a result you may have noticed a variation in responses letters upon submission of a SAR. To clarify, the following response letters may be sent out upon receipt of a SAR.

  • Consent to maintain or operate
  • Acknowledgement Letter
  • No consent
  • Exit letter

There will undoubtedly be anomalies, for example declined business or special requests where the FIU may address a specific matter. This may be responded to outside of the above standard letters.

In the majority of cases, exit will not be addressed upon the initial submission of a SAR; to allow the FIU to investigate the suspicion(s) raised. Exit shall remain a commercial decision for the submitting institution.

There will no longer be a “consent to exit” response letter, the “Exit letter” (mentioned above) will advise there are no known investigations ongoing at this time and the decision to exit will remain a commercial decision for the submitting institution.

Should you have any queries in relation to this, please contact the FIU.

SAR Submission 

As Jersey continues to make preparations for its first National Risk Assessment, there is a recognition that changes are required to the SAR template amongst other areas to improve the quality and standard of submissions to the FIU. Part of these changes require the FIU to assist industry in the preparation of SARS. To that end the FIU worked alongside some of your colleagues in industry last year to identify a minimum standard that a SAR should contain within the “Disclosure Box” where the narrative setting out the suspicion is placed.

In lieu of expected changes to the Money Laundering Order, the following criteria are suggested as best practice for inclusion in the submission of a SAR.

As a minimum it is requested that the following criteria are included in narrative of a SAR under the headings provided:

  • Criminality/Suspicion identified (Brief outline of criminal suspected)
  • Relationship/Services provided to Subject/Entity/Who last held relationship
  • Location of. and Value Assets under administration
  • SOF/SOW information held
  • What activity prompted SAR (Monitoring/Open source/Transaction
  • Details of suspicion (full rationale for suspicion)

If submission relates to a complex structure (More than 4 entities involved) please consider submission of a structure chart

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Who must report suspicious activity?

All financial services businesses and certain other businesses have an obligation to maintain procedures to prevent and detect money laundering. The obligation to report suspicions of money laundering extends to anyone who derives such suspicions from information obtained during the course of their trade, profession, business or employment.

Is there more than one type of SAR?

SARs can be “internal” or “external.” The format for an “internal” SAR may be institution-specific and should be submitted to your reporting officer in accordance with the policies and procedures set by your firm. 

An “external” SAR is submitted by the reporting officer to the FIU.

Do all “internal” SARs reach the FIU?

Not necessarily. Although the reporting officer is required to promptly examine the content of all “internal” SAR submissions, he or she may use their experience and knowledge to further investigate the suspicion and this may influence the decision as to when and if an “external” SAR is made.

When do I need to submit a SAR?

You should submit an “internal” SAR to the reporting officer as soon as it is reasonably practicable after you have formed a suspicion.

Internal reporting procedures also involve the reporting of attempted transactions and business that has been declined. The reporting officer is responsible for submitting an “external” SAR to the FIU if appropriate.

What information should I include on a SAR?

SARS should include the information giving rise to knowledge, suspicion or reasonable grounds for knowledge or suspicion of money laundering or financing terrorism activity. This will allow the SAR to be processed and acted upon as effectively as possible. 

Remember that the person who may be reviewing the SAR will probably not be an expert in your field. 

Why do I need to submit a SAR?

You are at risk of criminal prosecution if you entertain suspicion but do not report it. The penalty can be up to 5 years imprisonment and / or a fine.

Can I conduct the transaction / activity once I have submitted a SAR?

If you are submitting an “internal” SAR you should seek advice from your reporting officer as to whether you can continue. A reporting officer submitting an “external” SAR to the FIU will normally seek consent to undertake the specific activity in question.

Will I receive a response?

Yes. The FIU will always respond and normally within 48 hours. 

What is the meaning of “consent”?

The reporting officer will often seek “consent” to maintain the relationship or to conduct specified activity. If consent is granted, they will receive a defence to money laundering if it is later established that such assets did actually represent the proceeds of crime. 

How do I deal with a “no consent” situation?

Only a small minority of SARs submitted to the FIU receive “no consent.” This basically means that if any activity, proposed or otherwise, be permitted to take place, there is no protection from possible prosecution for money laundering or the financing of terrorism. 

A “no consent” is not a formal “freeze” or restraint on the account, although in practice the transactional effects are the same. When the FIU issue a “no consent” they will inevitably contact the reporting officer and discuss the matter and may be prepared to release him / her from the “tipping off” provisions.

Tipping off 

May I inform the client / anyone that I have submitted a SAR?

You must not tell the client that you have submitted a SAR or you may commit the criminal offence of “tipping off.” The penalty can be up to 5 years imprisonment and / or a fine. Best practice is not to discuss the fact that you have made SAR with anyone except the appropriate person within your firm. 

Will I need to appear in court if I submit an “internal” SAR?

Only in extremely exceptional circumstances. The reporting officer will not include your name in any “external” SAR that is submitted to the FIU. The information on the SAR will be treated in confidence on an “intelligence-only” basis and in order to use the material referred to as “evidence” in any legal proceedings, the FIU would need to obtain production orders from the Bailiff. The evidential chain would therefore start when the material is provided in response to the production order.

Production orders

Compiling a SAR

The guide to compiling a SAR covers the following:

  • your obligations
  • laws and legislation
  • format, timing and content – making a good disclosure
  • how to fill in the SAR form and what information you will need to provide
  • data protection information
  • information about what happens after you’ve submitted a SAR

Guide to completing a SAR March 2016

Submitting a SAR to the FIU

SARs are to be submitted through the FIUs secure online submission service. To sign up please email JFCUAdmin@jersey.pnn.police.uk and you will receive registration instructions.

Information Security Statement

When the FIU receive a Suspicious Activity Report (SAR), we make an initial assessment taking into account issues such as whether consent can be granted.

Further analysis allows us to determine how the intelligence is developed. This might include disseminating it on an intelligence basis, typically to an equivalent overseas financial intelligence unit. We only pass on intelligence on a carefully sanitised basis and with strict conditions on how it can be handled and processed.

What will the FIU do with the information?

All SARs received by the FIU are individually graded and prioritised before allocation to an financial investigator. The information is predominantly used in relation to the detection of financial crime and money laundering but can also be helpful in relation to detecting other criminal activity. 

The information may be disseminated to other law enforcement agencies in certain circumstances but only in a strictly sanitised format which does not include the name of the reporting officer or institution, and subject to very strict handling conditions. The SAR may also be shared with the JFSC.

 

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