There is regularly – and quite rightly – a fair amount of soul-searching about the SARs regime. Does it shift the burden of investigation from law enforcement to the financial sector? Does it cost much more than it saves? Are people doing it properly? Does it work at all? Many of those who know the most about the system suggest that there is significant room for improvement – including Tom Keatinge, director of the Centre for Financial Crime and Security Studies at RUSI, in a recent interview with KYC360.
Even the much-vaunted, world-beating, best-ever mutual evaluation of the UK by the FATF back in December 2018 had to admit that things were not ideal: “The UK has made a deliberate policy decision to limit the role of the UK Financial Intelligence Unit in undertaking operational and strategic analysis which calls into question whether SAR data is being fully exploited in a systematic and holistic way and providing adequate support to investigators. Additionally, while reports of a high quality are being received, the SAR regime requires a significant overhaul to improve the quality of financial intelligence available to the competent authorities.”
But to balance this out, it is important to remind ourselves that the alternative to having a SARs regime is not to have one – which is patently not acceptable – and that the information supplied in SARs may not be a silver bullet but is frequently extremely useful. To this end, FinCEN (the American FIU) runs an annual FinCEN Director’s Law Enforcement Awards Program to recognise law enforcement agencies that have used SARs (technically, filings under the Bank Secrecy Act) to successfully pursue and prosecute criminal investigations. This year, agencies recognised are the FBI, Immigration and Customs Enforcement/Homeland Security, New York State Police, the Internal Revenue Service and the Drug Enforcement Administration. And crimes investigated with the assistance of SAR data were significant fraud, cyber-threat, counterfeiting, mortgage fraud and more. In one case involving a dodgy law firm, “task force officials analyzed approximately 100 BSA filings, often leading to new subjects and victims located throughout the United States”. And in another, “Investigators identified [SARs] of multiple financial institutions involving the two individuals [and] followed a complex trail of cash transactions, personal loans, mortgage loans, lines of credit, construction loans, cashier’s checks, credit cards, and Automated Clearing House transactions in order to trace the origin of the funds used in a series of fraudulent real estate transactions”. Thanks to current restrictions, the happy winners will have to wait until October to collect their awards from FinCEN, but luckily the baddies will suffer no such delay and have all gone straight to jail.