skip to navigation
skip to content

Financial Outsourcing Solutions


FOS Blog

29 Mar

SAR Reporting: AML & Fraud Together

SAR Reporting: AML & Fraud Together

With enhanced emphasis of SAR reporting relating to cyber security, terrorist financing, human trafficking, fraud, ID theft, and elder abuse in recent years, there is a structural change in that SAR reports are no longer mainly focused on reporting suspicious transactional activity like structuring, funds transfers, and unusual cash transactions to identify criminal activity within the financial system.  Typical transaction activity reports or automated suspicious activity systems are most likely not going to capture these emphasized areas.  There is heighted ongoing risk that criminals have found other means to move their illicit funds and infiltrate the financial system.  They are aware of the typical red flags and are finding new ways to disguise the movement of money.

As a result of this shift, silos need to be broken down throughout the organization and for concerns to be escalated no matter how big or small they could be considered.  The determination of reporting should lie with the BSA Officer; therefore, open communication with all employees is crucial to ensure a reporting process is in place.  To start, employees have to be provided the education, awareness, and comfort level to report potential suspicious activity.  Suspicious activity examples and scenarios need to be provided on an ongoing basis in order for employees to be able to identify any possible suspicious activity that could have an effect on the Bank and their customers.   This will foster upward reporting since BSA may not always be involved or privy to activity that could be compromised.  The front line responsibilities have increased and may still be the first line of defense to identify human trafficking or elder abuse; however, Information Technology departments now play a part in identifying and investigating suspicious activity in which they may not have been a part of in the past.

Ways to incorporate a reporting line throughout the organization are the implementation of a case management communication system, Intranet form, hotline, or group email to escalate possible situations for review and consideration to BSA.  Newsletters of hot topics and real life examples should be provided periodically to keep employees aware and on the forefront for identifying suspicious activity. Although the online training courses utilized more often today are convenient and would cover the annual BSA training requirement, due to the heightened risk and sophistication of fraud and AML, Bank’s should consider tailored training by providing scenarios and reiteration of the Bank’s escalation process of potential suspicious activity.  Additionally, an evaluation of automated fraud or suspicious activity systems should be performed to ensure optimization for identifying potential activity outside of transaction activity such as cyber events, i.e. IP address mismatches.

The BSA Officer should ask themselves, is everyone coming together and has the expectation been communicated?    Communication and involvement throughout the financial institution is key for protection of the financial institution and their customers to ensure suspicious activity reporting is performed when necessary to law enforcement.