There are several factors to consider when it comes to the quality and accuracy of the Suspicious Activity Report, or SAR narrative. Keep these points in mind because it will ultimately impact the work of law enforcement.
Financial institutions should include all known subject information when writing the SAR narrative. The importance of the accuracy of this information cannot be overstated. Inaccurate information on the SAR, or an incomplete or disorganized narrative, may make further analysis difficult, if possible.
The Importance of SAR Narrative Quality and Accuracy
There may be legitimate reasons why certain information may not be provided in an SAR, such as when the filer does not have the information. A thorough and complete narrative may make the difference in determining whether the described conduct and its possible criminal nature are clearly understood by law enforcement. Because the SAR narrative section is the only area summarizing suspicious activity, the section, as stated on the SAR, is “critical.” Thus, a failure to adequately describe the factors making a transaction or activity suspicious undermines the purpose of the SAR.
By their nature, SAR narratives are subjective, and examiners generally should not criticize the financial institution’s interpretation of the facts. Nevertheless, financial institutions should ensure that SAR narratives are complete, thoroughly describe the extent and nature of the suspicious activity and are included within the SAR.
Another word of caution – if you mention any remedial actions your institution is taking against the account because of the SAR or multiple SAR filings, you must ensure you follow through with those actions. If you say that your institution will close the account, make sure it gets closed. Or, if you say the account will be reviewed again in 90 days, make sure it is. Or, if you say it will be added to a watch list, make sure it is added.
These types of statements commit your institution to an action that auditors, regulators, and prosecutors can and will follow up on in the worst-case scenarios. Weigh the value of these types of statements to your overall narrative before committing such type statements to ink.
In addition, many countries’ SAR filing systems accept documents as attachments to the SARs. This capability allows a financial institution to include transactional data such as specific financial transactions and funds transfers or other analytics, which is more readable or usable in this format than it would be if otherwise included in the narrative.
Such an attachment will be considered a part of the narrative and not a substitute for the narrative. For example, narratives should not simply state “see attachment” if the financial institution included an attachment. As with other information that may be prepared in connection with the filing of an SAR, an attachment is considered supporting documentation and should be treated as confidential to the extent that it indicates the existence of an SAR. Instead, the SAR narrative should refer to the attachment and embed it meaningfully.
The bond between Anti Money Laundering, or AML professionals and law enforcement has never been stronger. These two groups’ trust, reliance, and synergy have grown over the last few years. Both groups face resource allocation challenges, but AML professionals are uniquely positioned to assist law enforcement with their portion of the problem. Regardless of the channel of dissemination, law enforcement must identify the best and most actionable cases, as these have the best chance of being prosecuted successfully. AML professionals can help with this process by making their SARs more useful and effective by incorporating the tips and advice discussed here into their daily reporting.