Suspicious Activity Report (SAR) definition and meaning | AML glossary
Suspicious Activity Report (SAR) definition: What it means in AML compliance.
A Suspicious Activity Report (SAR) is a key compliance tool used by regulated firms to report transactions or activities that may indicate money laundering, terrorist financing, or other financial crimes. Submitting a SAR allows law enforcement and regulatory authorities to investigate potential criminal activity while ensuring that businesses meet their Anti-Money Laundering (AML) obligations.
When should a Suspicious Activity Report be filed?
A SAR should be submitted when a business suspects that a transaction, customer behaviour, or financial activity is unusual and could be linked to illicit activity. This may include transactions that lack a clear legitimate purpose, rapid movement of funds between multiple accounts, or attempts to evade identity verification checks. Businesses must ensure they do not alert the subject of the report, as tipping off is a criminal offence under UK AML regulations.
Compliance obligations for businesses.
Under the Proceeds of Crime Act 2002 (POCA) and the Money Laundering Regulations 2017, regulated firms must have processes in place to detect and report suspicious activity. This includes implementing effective KYC and due diligence procedures, monitoring customer activity for red flags, and training employees to identify potential risks. Firms must submit SARs to the UK Financial Intelligence Unit (UKFIU) via the National Crime Agency (NCA) when suspicious activity is detected.
Technology’s role in SAR compliance.
Automated compliance technology helps businesses streamline SAR reporting by enhancing due diligence checks and ensuring real-time screening against global sanctions and watchlists. Continuous monitoring solutions can identify unusual activity, flagging potential risks before a SAR is required. By leveraging these tools, firms can reduce manual effort, improve compliance accuracy, and ensure they meet regulatory obligations effectively.
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